Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations.
The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our consolidated financial statements and related notes included elsewhere in this Annual Report on Form 10-K. In addition to historical financial information, this discussion contains forward-looking statements based upon current expectations that involve risks and uncertainties. Our actual results could differ materially from those anticipated in these forward-looking statements as a result of various factors, including those set forth under “Special Note Regarding Forward-Looking Statements” and “Risk Factors” and elsewhere in this Annual Report on Form 10-K. Our fiscal year ends on December 31 each year.
Overview
We are a clinical-stage biotechnology company focused on developing novel therapeutics to address unmet medical needs in liver diseases and viral infections, including in the areas of chronic hepatitis B virus (HBV) infection, metabolic dysfunction-associated steatohepatitis (MASH), and coronavirus infections (e.g., SARS‑CoV‑2, SARS‑CoV, MERS‑CoV, and other related infections) as well as obesity. The Aligos team has a demonstrated track record of success in drug development and medicinal chemistry in liver and viral diseases, resulting in three potential best‑in‑class drug candidates currently in clinical development.
Our pipeline of drug candidates includes pevifoscorvir sodium (previously known as ALG‑000184) for chronic HBV infection, ALG‑055009 for MASH and obesity, ALG‑097558 for coronavirus infections, and a portfolio of preclinical programs. Pevifoscorvir sodium is our potential best‑/first‑in‑class Capsid Assembly Modulator (CAM‑E) for chronic HBV infection which has shown in pre-clinical testing to have enhanced pharmacologic properties vs. competitor CAM‑E drugs and greater HBV DNA suppression compared to the standard of care, nucleos(t)ide analogs (NAs), and has shown multi-log 10 reductions in viral antigens in Phase 1 clinical studies conducted to date. ALG‑055009 is our potential best‑in‑class thyroid hormone receptor beta (THR‑β) agonist for obesity and MASH with pharmacologic properties that appear to be enhanced based on data to date vs. competitor THR-β agonists. Phase 2a topline data in MASH demonstrated that ALG‑055009 dose groups met the primary endpoint with statistically significant reductions in liver fat at Week 12 as measured by MRI-PDFF in subjects with presumed MASH. Recently presented nonclinical data suggests synergistic fat mass loss in combination with incretin receptor agonists in diet induced obese (DIO) mice. ALG‑097558 is our potential best‑in‑class small molecule pan-coronavirus 3CL protease inhibitor (PI), which has been at least 3-fold more potent in cell-based assays of coronavirus infection than other approved CoV PIs and we believe can be dosed twice daily without the requirement for ritonavir co-dosing based on Phase 1 clinical studies conducted to date.
Pevifoscorvir sodium: Potential best‑in‑class small molecule CAM‑E for chronic hepatitis B virus infection
Our primary area of focus seeks to enhance the viral suppression and rate of functional cure for chronic HBV infection, which often results in life-threatening conditions such as cirrhosis, end-stage liver disease, and the most common form of liver cancer, hepatocellular carcinoma (HCC). To achieve this, we are developing a portfolio of differentiated chronic HBV infection drug candidates, including a small molecule CAM that results in the production of empty viral capsids.
In 2018, we in‑licensed a lead drug candidate (GLP‑26) and the associated IP for a CAM‑E from the laboratory of Professor Raymond Schinazi at Emory University. Our scientists optimized this lead drug candidate to discover the highly potent CAM‑E, ALG‑001075, which was further optimized to the prodrug pevifoscorvir sodium. Based on pre-clinical data to date, pevifoscorvir sodium has superior DMPK properties with enhanced absorption and high liver uptake, with a ~2-300-fold improvement in in vitro potency compared to other known CAMs. CAM‑Es are a class of small molecule antiviral agents that accelerate HBV capsid assembly and inhibit pgRNA encapsidation (1st MOA), resulting in empty viral capsids and lower circulating HBV DNA and RNA levels. CAM‑Es are also believed to prevent the establishment of cccDNA (2nd MOA), a major factor for the persistence of HBV infection which can be assessed by circulating HBV antigen levels (HBsAg, HBcrAg, and HBeAg). In clinical trials, competitor CAM‑Es have shown reductions in HBV DNA and RNA (1st MOA), but have rarely or inconsistently shown reductions in HBV antigens (2nd MOA). There have also been observations of the emergence of viral CAM-E drug resistance with competitor compounds.
A multi-part Phase 1 study is complete, with evaluation of the safety, tolerability, and pharmacokinetic profile of pevifoscorvir sodium in HVs. Additionally, a dose-ranging phase assessing the safety, pharmacokinetics (PK), and antiviral activity of 10‑300 mg doses of pevifoscorvir sodium administered over 28 days in untreated HBeAg+/- subjects with chronic HBV infection has also been completed. In these study phases, pevifoscorvir
sodium was found to be well tolerated with a favorable PK profile and demonstrated potentially best-in-class multi-log 10 HBV DNA and RNA reductions at all doses tested, as well as HBV surface antigen (HBsAg) reductions in a subset of HBeAg+ subjects receiving 100 mg or 300 mg of pevifoscorvir sodium (Hou et al, AASLD 2022). Based on the favorable profile observed with dosing up to 300 mg of pevifoscorvir sodium for 28 days, additional Phase 1 studies evaluated the risk-benefit profile of pevifoscorvir sodium at doses of 300 mg, with or without entecavir (ETV) therapy, for up to 96 weeks in HBeAg+ and HBeAg- subjects with chronic HBV infection. Data from these cohorts (Yuen et al., AASLD 2025) have been presented, showing that pevifoscorvir sodium, administered for up to 96 weeks, was well tolerated, exhibited a favorable PK profile, and suggested potentially best-in-class potent and durable antiviral activity.
Data from this study following an oral daily dose of 300 mg pevifoscorvir sodium monotherapy in HBeAg+ subjects demonstrated sustained HBV DNA suppression (<LLOQ (10 IU/mL, target detected (TD) or target not detected (TND)) in 6/10 (60%) subjects with chronic HBV infection at Week 48 and 9/9 (100%) at Week 96. Additionally, HBV DNA level continuously declined to < LLOQ (10 IU/mL, TND) in 5 of 10 subjects at Week 96. Data from the 300 mg pevifoscorvir sodium HBeAg- monotherapy cohort demonstrated HBV DNA suppression in all 11/11 (100%) subjects by Week 24 with the HBV DNA suppression level maintained for up to 96 weeks, with further decline in HBV DNA to < LLOQ (10 IU/mL, TND) observed in 8/9 subjects (89%) at Week 96. Importantly, no viral breakthrough was observed in any subject, and no known CAM resistant mutations were identified.
Additionally, HBV RNA level achieved < LLOQ (10 copies/mL) in all HBeAg+ and HBeAg- subjects by Week 52 and Week 6, respectively. Furthermore, concurrent multi-log 10 reductions in HBV antigens (HBsAg, HBeAg, and HBcrAg) in HBeAg+ subjects and HBcrAg decline in HBeAg- subjects were observed, suggesting the potential inhibition of cccDNA establishment by CAM-E 2nd mechanism of action of pevifoscorvir sodium.
Further, data presented at AASLD’s The Liver Meeting® 2025 highlighted outcomes for treatment-naïve or currently not treated HBeAg+ and HBeAg- subjects who completed 96 weeks of 300 mg pevifoscorvir sodium monotherapy, followed by 8 weeks of nucleos(t)ide analog (NA) monotherapy. Reductions in HBV DNA, HBV antigens, and HBV RNA were largely maintained during the NA-only 8-week follow-up period. Notably, viral biomarkers such as HBV antigens and HBV RNA are typically unaffected by NA therapy, suggesting that pevifoscorvir sodium may reduce the cccDNA pool through engagement of its secondary mechanism of action (Yuen et al., AASLD 2025).
Additionally, preclinical in vitro data demonstrated that ALG-001075, the active parent moiety of pevifoscorvir sodium, can prevent cccDNA formation and HBV DNA integration. This finding is further supported by cell-based studies, which showed prevention of cccDNA establishment and HBV DNA integration following treatment with ALG-001075 (Verheyen, et. al. AASLD 2025).
With the completion of the 96 week Phase 1 study, we initiated the Phase 2 B-SUPREME study (NCT06963710), which is designed as a randomized, double-blind, active-controlled multicenter study evaluating the safety and efficacy of pevifoscorvir sodium monotherapy compared with tenofovir disoproxil fumarate for 48 weeks in approximately 200 currently untreated HBeAg+ and HBeAg- adult subjects with chronic HBV infection. The primary endpoint in the HBeAg+ arm is HBV DNA <LLOQ (10 IU/mL, TD or TND) and the primary endpoint in the HBeAg- arm is HBV DNA <LLOQ (10 IU/mL, TND). The study is also evaluating safety, PK, and other secondary and exploratory HBV biomarkers, including reductions in HBV antigens and other markers of HBV infection. The Phase 2 study has obtained regulatory approvals to move forward in every country included in the study, has reached the planned number of subjects enrolled in the HBeAg- cohort, and is currently enrolling subjects in the HBeAg+ cohort.
The first interim analysis is expected to occur in the first half of 2026. The first protocol defined interim analysis includes approximately 60% (or 36) HBeAg- participants that complete 12 weeks of the treatment period. This enrollment milestone occurred in Q4 2025.
A second protocol defined interim analysis is planned when approximately 50% (or 55) HBeAg+ participants complete 24 weeks of the treatment period. This enrollment milestone occurred in January 2026. This interim analysis is expected to occur in the second half of 2026.
To preserve study integrity and comply with FDA regulatory requirements, we will remain blinded to subject-level data and will receive insights from the Data Safety Monitoring Board on protocol-specified assessments, including the potential for sample size re-estimation at each interim analysis.
Topline data for the Phase 2 B-SUPREME study are expected in 2027.
Compared to Phase 3 studies with the current standard of care nucleos(t)ide analogs (NAs), tenofovir disoproxil fumarate (TDF) and tenofovir alafenamide (TAF) (Buti et al., Lancet Gastro, 2016; Chen et al., Lancet Gastro 2016), these Phase 1 data to date suggest, subject to confirmation via further study, that pevifoscorvir sodium treatment may be superior to NAs in HBeAg+/- subjects in achieving HBV DNA levels < LLOQ (10 IU/mL) after 48 weeks on treatment. Chronic suppressive therapy of HBV DNA levels is a validated approval pathway in chronic HBV infection (Food and Drug Administration (FDA) Guidance, Chronic Hepatitis B Virus Infection: Developing Drugs for Treatment Guidance for Industry, April 2022 – Section III.B.1.a). We have received affirmative feedback from the FDA, the Committee for Medicinal Products for Human Use (CHMP: EU) and the National Medical Products Administration (NMPA: China) supporting subsequent studies utilizing the chronic suppressive therapy pathway for pevifoscorvir sodium. Our ongoing Phase 2 B-SUPREME study is being conducted to test superiority to standard of care NA treatment (HBV DNA levels <LLOQ (10 IU/ml, TD or TND) in HBeAg+ subjects and HBV DNA levels < LLOQ (10 IU/ml, TND) in HBeAg- subjects) after 48 weeks of monotherapy treatment. Furthermore, when combined with other mechanisms of action, including other candidates in our chronic HBV infection portfolio, pevifoscorvir sodium dosing regimens have the potential to contribute to achieving higher rates of functional cure, subject to testing such endpoint, as compared with currently approved agents.
We are also exploring additional ways to potentially treat patients with chronic HBV infection, including our antisense oligonucleotide (ASO) platform which utilizes novel monomers that could potentially reduce ASO toxicity and improve ASO liver to kidney ratios. Along with our partner Xiamen Amoytop Biotech Co., Ltd. (Amoytop), ALG-170675 was recently selected to proceed into IND-enabling studies. Current costs for development in China are being funded by Amoytop, who maintain rights in China, Taiwan, Hong Kong and Macau. This next-generation ASO works via two mechanisms of action. It targets and destroys HBsAg mRNA and activates the immune response through TLR-8 agonism.
Additionally, we are pursuing a novel strategy for a potential cure for hepatitis delta virus (HDV) coinfection by utilizing a proprietary ASO approach targeting the destruction of the viral genome. Ongoing work is aimed at the selection of a clinical development candidate.
ALG‑055009: Potential best-in-class small molecule THR-β agonist for metabolic dysfunction-associated steatohepatitis and obesity
Obesity is a complex disease caused by an overabundance of body fat that increases the risk of other comorbidities, such as MASH. MASH is a complex, chronic liver disease which is a leading cause of liver-related morbidity including cirrhosis, hepatocellular carcinoma, liver transplant, and end-stage liver disease. In 2014, the first GLP-1 receptor agonist, liraglutide, was approved for weight loss and in 2024, the FDA approved resmetirom, a THR-β agonist, as the first drug for the treatment of MASH. However, additional agents in these classes are needed to address remaining unmet needs, including the potential for improved efficacy and a more favorable risk-benefit profile. To achieve this, ALG-055009 has been purposefully designed to exhibit significantly greater potency (approximately 50-fold higher compared to resmetirom in head-to-head in vitro studies) and enhanced β selectivity, along with optimized pharmacologic properties to deliver a potentially improved PK profile compared to other THR-β agonists. We believe these advantages position ALG‑055009 as a candidate to become a -in-class THR-β agonist.
A first-in-human Phase 1 study of ALG‑055009 in MASH in HVs (oral single ascending doses (SAD)) and in subjects with hyperlipidemia (14 oral daily multiple ascending doses (MAD)) has been completed. Clinical data after single doses up to 4 mg and multiple doses up to 1 mg showed that ALG‑055009 was well tolerated, had dose proportional PK with low intersubject variability, and demonstrated expected thyromimetic effects (i.e., generally dose proportional increases in sex hormone binding globulin and decreases in various atherogenic lipids and thyroid hormones without any clinical evidence of thyroid dysfunction). We also evaluated relative bioavailability where we showed the soft gelatin capsules used in the Phase 2a study described below delivered similar exposures compared to the solution formulation used in the SAD/MAD parts of the Phase 1 study; we observed low intersubject PK variability and there was no evidence of a meaningful food effect.
Based on these promising Phase 1 data, we conducted the Phase 2a HERALD study (NCT06342947) at sites across the United States. The study was a 12-week randomized, double-blind, placebo-controlled trial evaluating 4 doses (0.3 mg, 0.5 mg, 0.7 mg, and 0.9 mg) of ALG-055009 vs. placebo in 102 subjects with presumed MASH and liver fibrosis at stages 1-3 (F1-F3). The primary endpoint of this study was percent relative change in
liver fat content by MRI-PDFF at Week 12. This study also evaluated the safety and PK of ALG-055009 treatment and its effect on multiple other efficacy biomarkers, including other non-invasive tests previously shown to be impacted by treatment with THR‑β agonists. We announced positive topline data from this study in 2024, demonstrating that ALG-055009 dose groups were well-tolerated and met the primary endpoint. Specifically, doses of 0.5 mg to 0.9 mg ALG-055009 demonstrated statistically significant reductions in liver fat at Week 12, with placebo-adjusted median relative reductions up to 46.2% as measured by MRI-PDFF. Up to 70% of subjects achieved ≥30% relative reduction in liver fat compared to baseline. Eighteen subjects who were on stable GLP-1 agonist therapy qualified for enrollment in the study, with liver fat content meeting the inclusion criteria of ≥10% at baseline as measured by MRI-PDFF. Notably, 11 of 14 subjects on stable GLP-1 agonists treated with ALG-055009 had liver fat decreases, whereas 4 of 4 subjects on stable GLP-1 agonists treated with placebo had increases in liver fat over the 12-week dosing period (Loomba et al, AASLD 2024).
In the Phase 2a HERALD study, ALG‑055009 demonstrated a favorable tolerability profile with no evidence of clinical hyper/hypothyroidism. Incidence of gastrointestinal-related treatment emergent adverse events were similar in ALG‑055009 dose groups compared to placebo. Specifically, similar rates of diarrhea were observed in ALG‑055009 dose groups compared to placebo, with no dose-response. Significant reductions in atherogenic lipids, including LDL-C, lipoprotein (a), and apolipoprotein B, were also observed (Loomba et al, AASLD 2024).
Preclinical and clinical findings reported by other companies have suggested that THR-β agonists can significantly enhance weight loss when administered in combination with incretin receptor agonists (RAs) for the treatment of obesity.
Recently presented in vivo data in diet induced obese (DIO) mice treated with SEMA, TIRZEP, or a combination of ALG-055009 and SEMA or TIRZEP for 28 days demonstrated synergistic weight loss in the combination groups compared to monotherapy groups. SEMA monotherapy resulted in a maximum of 23.9 ±2.6% body weight loss, while the combination of SEMA and ALG-055009 had an additional 8.6% decrease for a maximum 33% body weight loss. The low and high doses of TIRZEP led to maximum of 27.1 ±2.7% and 34.4 ±1.6% body weight loss, respectively. Combination of TIRZEP (low) or TIRZEP (high) with ALG‑055009 induced an additional 11.7% and 5.8% decrease for a maximum of 39% and 40% body weight loss, respectively.
Furthermore, the additional weight loss in the combination therapy of either incretin receptor agonist and ALG-055009 was mainly due to additional loss of fat mass, with no significant effect on lean mass or food consumption as compared to incretin receptor agonist monotherapy. These preclinical data suggest a potentially significant benefit of adding ALG-055009 to an incretin receptor agonist therapy for weight loss, especially in combination with a low-dose of a potent molecule, such as tirzepatide.
We believe ALG-055009 warrants further development as a potential treatment for both obesity and MASH. We are continuing to evaluate a variety of options to fund continued development, including potential out-licensing.
ALG‑097558: Potential best-in-class small molecule ritonavir-free protease inhibitor for pan-coronavirus
Another area of focus is to develop drug candidates with pan-coronavirus antiviral activity, including against Severe Acute Respiratory Syndrome coronavirus 2 (SARS-CoV-2), the virus responsible for COVID-19. In this area of focus, we are exploring small molecule coronavirus 3CL protease inhibitors (PIs) in collaboration with the Rega Institute at Katholieke Universiteit Leuven (KU Leuven), the Center for Innovation and Stimulation of Drug Discovery (CISTIM) and the Centre for Drug Design and Discovery (CD3). This collaboration led to the discovery of ALG‑097558 which has completed a Phase 1 first-in-human evaluation in HVs and advanced into a clinical trial evaluating the compound in high-risk COVID-19 patients.
ALG‑097558 has been shown in preclinical studies to be at least 3-fold more potent than nirmatrelvir and other PIs in clinical development against a panel of SARS-CoV-2 variants (including Omicron). It also has demonstrated broad pan‑coronavirus activity, including against SARS-CoV-1 and MERS-CoV in preclinical studies. In the first-in-human Phase 1 clinical study, single doses up to 2000 mg and multiple doses up to 800 mg Q12H for 7 days were well tolerated with an acceptable PK profile that suggests ritonavir boosting may not be required. Furthermore, the absence of a clinically relevant DDI with midazolam suggests that ALG‑097558 may be shown to be appropriate for co-administration with CYP3A4 substrates (NCT05840952). Based on these Phase 1 data (Wilkes et al., RespiDart, 2024), the projected efficacious dose range to treat SARS-CoV-2 is 200-600 mg ALG‑097558 Q12 x 5 days, without the need for ritonavir coadministration.
A Phase 2 study of ALG‑097558 began in 2024. The AGILE trial, a United Kingdom government-supported platform trial (MRC and Wellcome Trust funding), is sponsoring and performing a study in standard and high‑risk COVID‑19 patients evaluating ALG‑097558 as monotherapy or in combination with remdesivir (NCT04746183). We expect that future development of ALG‑097558 will be funded by external sources, including public funding sources as described below.
Preclinical activities for our coronavirus program were partially funded through a grant from the National Institutes of Health (NIH) and the National Institute of Allergy and Infectious Diseases (NIAID) Antiviral Drug Discovery (AViDD) Centers for Pathogens of Pandemic Concern program through the Metropolitan AntiViral Drug Accelerator (MAVDA) consortium. Specific clinical and nonclinical studies for the ALG-097558 program and the follow up compound, are now also being funded with federal funds from the NIAID, NIH, Department of Health and Human Services, under Contract No. 75N93023C00052. We filed an IND in the third quarter of 2024. We expect to receive approximately $15.3 million in funds across these two NIH awards and contracts to support these activities. To date, these funds have not been impacted by any changes at the NIH or NIAID. We are also seeking additional external funding (e.g., from governmental agencies) and/or collaborations (e.g., platform trials) to support future studies as we advance ALG‑097558 for the treatment of COVID‑19 and future coronavirus pandemics.
Components of our results of operations
Revenue
Our revenues consist of the following:
Collaboration revenue included recognition of our upfront payments pursuant to an agreement and amendment with Merck Sharp & Dohme Corp, that were terminated in prior years. In order to record collaboration revenue, we utilized an input method to recognize revenue over time as costs were incurred.
Customer revenue includes recognition of revenue generated from research and development services under third-party contracts with customers. In order to record customer revenue, we utilize an input method to recognize revenue over time as costs are incurred.
Operating expenses
Our operating expenses since inception have consisted solely of research and development costs and general and administrative costs.
Research and development expenses
We expect our expenses to increase substantially in connection with our ongoing clinical development activities related to our chronic HBV infection drug candidate pevifoscorvir sodium. We rely substantially on third parties to conduct our discovery activities, nonclinical studies, clinical trials and manufacturing. We estimate research and development expenses based on estimates of services performed, and rely on third party contractors and vendors to provide us with timely and accurate estimates of expenses of services performed to assist us in these estimates. A portion of our research and development expenses are based on contractual milestones. Research and development costs consist primarily of costs incurred for the identification and development of our drug candidates through our technology platforms, which include:
salaries, benefits and other employee-related costs, including stock-based compensation expense, for personnel engaged in research and development functions;
costs of outside consultants, including their fees, and related travel expenses;
costs associated with in-process research and development, including license fees and milestones paid to third-party collaborators for technologies;
costs related to production of clinical materials, including fees paid to contract manufacturers;
expenses incurred under agreements with collaborators that perform nonclinical activities;
costs related to compliance with regulatory requirements; and
facility costs, depreciation, and other expenses, which include direct and allocated expenses for rent and maintenance of facilities, insurance, and other supplies.
We expense research and development costs as the services are performed or the goods are received. Non-refundable payments for goods or services that will be used for future research and development activities are deferred and capitalized. Such amounts are recognized as an expense as the goods are delivered or the related services are performed until it is no longer expected that the goods will be delivered or the services will be rendered.
Our research and development costs may increase in future periods as we continue to invest in research and development activities and advance our nonclinical and clinical programs through clinical development. The process of conducting nonclinical studies and, eventually, clinical trials necessary to obtain regulatory approval is costly and time consuming, and the successful development of our drug candidates is highly uncertain. As a result, we are unable to determine the duration and completion costs of our research and development projects or clinical trials or if and to what extent we will generate revenue from the commercialization and sale of any of our drug candidates.
General and administrative expenses
General and administrative expenses consist primarily of salaries and other related costs, including stock-based compensation, for personnel in our executive, finance, corporate, legal and business development and administrative functions. General and administrative expenses also include legal fees relating to patent and corporate matters; professional fees for accounting, auditing, tax and consulting services; insurance costs; travel expenses; and facility-related expenses, which include direct depreciation costs and allocated expenses for rent and maintenance of facilities and other operating costs not otherwise classified as research and development costs.
Our general and administrative expenses may increase in the future as we increase our general and administrative personnel headcount to support personnel in research and development and to support our operations generally as we increase our research and development activities and activities related to the potential commercialization of our drug candidates. We may also incur increased expenses associated with operating as a public company, including costs of accounting, audit, legal, regulatory and tax-related services associated with maintaining compliance with exchange listing rules and requirements of the Securities and Exchange Commission (the SEC), director and officer insurance costs, and investor and public relations costs.
Interest and other income, net
Interest and other income, net comprises interest income, net and other income, net. Interest income, net primarily consists of interest earned on our cash, cash equivalents, and investments. Other income, net includes investments and foreign currency gains/losses.
Change in fair value of 2023 Common Warrants
The change in fair value of 2023 Common Warrants includes the remeasurement of the 2023 Common Warrants using the Black Scholes option pricing model at each reporting period.
Income tax provision
Since our inception in 2018, we have not recorded any U.S. federal or state income tax benefits for the net losses we have incurred in any year or for our earned research and development tax credits, due to our uncertainty of realizing a benefit from those items. As of December 31, 2025, we had federal net operating loss (NOL) carryforwards of $92.5 million available to reduce taxable income and these NOLs can be carried forward indefinitely. We have state NOL carryforwards of $105.7 million as of December 31, 2025, available to reduce future state taxable income, which expire at various dates beginning in 2043. As of December 31, 2025, we also had federal and state research and development tax credit carryforwards of $3.5 million and $2.2 million, respectively. The federal research and development tax credit carryforwards begin to expire in 2043, while the state research and development tax credit carryforwards can be carried forward indefinitely. As of December 31, 2025, the Company had $3.2 million of Australian NOL carryforwards and $0.7 million of Australian research and development tax credit carryforwards available. The Australian NOL carryforwards and research and development tax credits have no expiration date.
On July 4, 2025, the One Big Beautiful Bill Act (OBBBA) was signed into law. The effects of this legislation include extending and modifying certain key provisions of the Tax Cuts and Jobs Act enacted in December 2017 (both domestic and international). The corporate tax rate remains unchanged but bonus, depreciation and an adjustment to the interest limitation were retroactive to January 1, 2025. The OBBBA makes additional changes to international tax provisions, including substantive changes to existing Global Intangible Low Tax Income, foreign-derived intangible income, and base erosion and anti-abuse tax provisions. These changes are effective for taxable years after 2025. The impact of this legislation does not materially impact the current period nor do we expect it to have a material impact on our tax positions for future years.
Under Sections 382 and 383 of the Internal Revenue Code (Code), and corresponding provisions of state law, if a corporation undergoes an “ownership change” (generally defined as a greater than 50 percentage point change (by value) in its equity ownership over a rolling three-year period), our ability to use our pre-change NOL carryforwards and other pre-change tax attributes to offset its post-change income may be limited. We performed a Code Section 382 analysis in 2025 and determined no further ownership change.
We may experience additional ownership changes as a result of subsequent shifts in our stock ownership, some of which may be outside of our control. In the future, if we earn net taxable income, our ability to use our pre-change net operating loss carryforwards or other tax attributes to offset U.S. federal taxable income may be subject to limitations, which could potentially result in increased future tax liability to us and could adversely affect our business, results of operations, and cash flows. In addition, under current tax law, federal NOL carryforwards generated in periods after December 31, 2017, may be carried forward indefinitely but, may only be used to offset 80% of our taxable income.
Results of operations
Comparison of the years ended December 31, 2025 and 2024
The following table summarizes our operating expenses for the years ended December 31, 2025 and 2024:
Twelve Months Ended
December 31,
Change
Revenue from collaborations
Revenue from customers
Operating expenses:
Research and development
General and administrative
Total operating expenses
Loss from operations
Interest and other income, net:
Interest income, net
Other income, net
Change in fair value of 2023 Common Warrants
Loss before income tax
Income tax provision
Net loss
Revenue from collaborations
Revenue from collaborations was $0.3 million for the year ended December 31, 2024. There was no collaboration revenue for the year ended December 31, 2025. This is due to the completion of the amended collaboration agreement with Merck ended in May 2024.
Revenue from customers
Revenue from customers was $2.2 million for the year ended December 31, 2025, compared to $3.6 million for the year ended December 31, 2024, a decrease of $1.4 million, primarily due to the collaboration and license agreement with Amoytop, the collaboration portion of which ended in November 2025. Refer to Note 10, Revenue from Contracts with Customers for further information.
Research and development expenses
We track direct external research and development expenses on a program-specific basis (chronic HBV infection, MASH, coronaviruses and early-stage programs). The following table summarizes these research and development costs (in thousands):
Year ended December 31,
Direct research and development expenses by development program:
Chronic Hepatitis B virus infection program
Metabolic dysfunction-associated steatohepatitis program
Coronaviruses program
Other early-stage programs
Total direct research and development expenses
Total indirect research and development expenses
Total research and development expense
Research and development expenses were $69.5 million for the year ended December 31, 2025, compared to $70.3 million for the year ended December 31, 2024, a decrease of $0.8 million. This is primarily due to a decrease of $1.8 million in third-party expenses due to increased government funds received for the coronavirus program which offset related costs. There was also a decrease of $0.2 million in depreciation. Offsetting this were increases of $0.4 million in employee-related costs, $0.4 million in facility expenses, and $0.4 million in travel and recruiting expenses.
We expect research and development expenses will increase in future periods as we continue to focus on advancing our clinical trials for pevifoscorvir sodium.
General and administrative expenses
General and administrative expenses were $20.7 million for the year ended December 31, 2025, compared to $22.8 million for the year ended December 31, 2024, a decrease of $2.1 million. This is due to a decrease of $2.1 million of third-party expenses primarily due to reduced legal and IP spend, and a decrease of $0.3 million in facility expenses. This was partially offset by an increase of $0.1 million in depreciation and $0.2 million in travel and recruiting costs.
We expect general and administrative expenses will increase in future periods due to increased activity in our research and development group, which will require more resources and additional activities in our general and administration group.
Interest income, net
Interest income, net was $2.2 million for the year ended December 31, 2025 compared to $1.7 million for the year ended December 31, 2024, an increase of approximately $0.5 million, primarily due to a higher average investment balance.
Other income, net
Other income, net was an income of $1.8 million for the year ended December 31, 2025 compared to income of $2.7 million for the year ended December 31, 2024, a decrease of $1.0 million. The difference was due to a decrease in the accretion of short-term investments.
Change in fair value of 2023 Common Warrants
The change in fair value of 2023 Common Warrants was an income of $60.2 million for the year ended December 31, 2025 compared to an expense of $46.1 million for the year ended December 31, 2024, a difference of $106.3 million. The increase was due to a change in the fair value of the 2023 Common Warrants measured using the Black Scholes option pricing model remeasured at each reporting period.
Liquidity and capital resources
Liquidity
We have incurred net losses and negative cash flows from operations in each year since our formation in February 2018. Our net losses were $24.2 million and $131.2 million for the years ended December 31, 2025 and 2024, respectively. We have had no revenue from product sales. We have not yet commercialized any products and we do not expect to generate revenue from sales of any drug candidates for at least several years, if ever.
Our operations have been financed primarily by net proceeds from the sale and issuance of our convertible preferred stock, net proceeds from our IPO, and the issuance of convertible debt.
In October 2023, we completed a PIPE offering and entered into a securities purchase agreement (the 2023 Securities Purchase Agreement) pursuant to which we issued 1,257,168 shares of our common stock, par value $0.0001 per share, pre-funded warrants to purchase an aggregate of 3,242,018 shares of our common stock (the 2023 Pre-Funded Warrants), and common warrants to purchase an aggregate of 2,249,680 shares of our common stock (the 2023 Common Warrants, and together with the 2023 Pre-Funded Warrants, the 2023 Warrants). Each 2023 Warrant is exercisable for one share of common stock. We received gross proceeds of $92.1 million, and after deducting the placement agent fees and expenses and offering costs, net proceeds were $86.2 million.
In February 2025, we entered into a securities purchase agreement (the 2025 Securities Purchase Agreement) with certain investors named therein (the Purchasers) pursuant to which we issued (i) 2,103,307 shares of common stock, consisting of 1,427,000 shares of voting common stock and 676,307 shares of non-voting common stock, (ii) pre‑funded warrants (the 2025 Pre-Funded Warrants) to purchase up to an aggregate of 1,922,511 shares of voting common stock, and (iii) accompanying common warrants (the 2025 Common Warrants and, together with the 2025 Pre-Funded Warrants, the 2025 Warrants) to purchase up to an aggregate of 2,012,909 shares of voting common stock. Each Warrant is exercisable for one share of common stock (the 2025 Private Placement). We received gross proceeds of approximately $105.0 million. In connection to the 2025 Private Placement, we also entered into a registration rights agreement with the Purchasers, pursuant to which we agreed to register for resale the shares of common stock sold to the Purchasers, as well as the shares of common stock underlying the 2025 Warrants sold to the Purchasers, on the terms set forth therein. We also entered into a registration rights agreement with Baker Brothers Life Sciences, L.P. (together with its affiliates, the Lead Investor), pursuant to which we agreed to file a resale registration statement with the SEC following demand by the Lead Investor to register the resale of shares of common stock and any common stock issued or issuable upon the exercise or conversion of non-voting common stock and any of our other securities held by the Lead Investor.
As of December 31, 2025, we had cash, cash equivalents and investments of $77.8 million. As of December 31, 2025, we had an accumulated deficit of $642.2 million. Substantially all of our net losses have resulted from costs incurred in connection with our research and development programs and from general and administrative costs associated with our operations. We expect to continue to incur significant expenses and increasing operating losses over at least the next several years. Our net operating losses may fluctuate from quarter to quarter and year to year depending primarily on the timing of our clinical trials and nonclinical studies and our other research and development expenses. We have no internal manufacturing capabilities or sales force and outsource a substantial portion of our clinical trial work to third parties.
Going concern
As of December 31, 2025 and December 31, 2024, we had an accumulated deficit of $642.2 million and $618.0 million, respectively, and cash, cash equivalents and short-term investments of $77.8 million and $56.9 million, respectively. Our current operating plan and projected cash outflows for the upcoming periods raise doubt about our ability to continue as a going concern for at least 12 months from the issuance of the financial statements included elsewhere in this Annual Report. We plan to raise additional capital to fund continued operations beyond the third quarter of 2026. We are taking steps to identify access to future capital and expect to be able to access capital in the future. However, there can be no assurance that any additional funding will be available to us on acceptable terms, if at all. If events or circumstances occur such that we do not obtain additional funding, it may be necessary to significantly reduce the scope of operations to reduce the current rate of spending, which could include reductions in staff and the need to delay, limit, reduce or terminate current or future product development, which could have a material adverse effect on our business, results of operations and financial condition. Moreover, even if financing efforts are and additional capital is obtained, available liquidity may still be to eliminate the aforementioned substantial regarding our ability to continue as a going . Accordingly, the report from our independent registered public accounting firm for the year ended December 31, 2025 includes an explanatory paragraph stating that our recurring since inception raise substantial about our ability to continue as a going . See Part I, Item 1A. Risk Factors under the header “Risks related to our limited operating history, financial position and need for additional capital” for additional information.
Capital resources
Our primary use of cash is to fund operating expenses, which consist primarily of research and development costs related to our drug candidates and our discovery programs, and to a lesser extent, general and administrative expenditures. Our current operating plan and projected cash outflows for the upcoming periods raise doubt about our ability to continue as a going concern for at least 12 months from the issuance of the financial statements. We expect our expenses to increase substantially in connection with our ongoing clinical development activities related to our
chronic hepatitis B drug candidate pevifoscorvir sodium, which has an ongoing Phase 2 clinical trial, as well as our research and development of our other drug candidates within our MASH and coronavirus programs.
We expect that our expenses will increase substantially to the extent we:
conduct our current and future clinical trials, and additional nonclinical studies;
initiate and continue research and nonclinical and clinical development of other drug candidates;
seek to identify additional drug candidates;
pursue marketing approvals for any of our drug candidates that successfully complete clinical trials, if any;
establish a sales, marketing and distribution infrastructure to commercialize any products for which we may obtain marketing approval;
require the manufacture of larger quantities of our drug candidates for clinical development and potentially commercialization;
obtain, maintain, expand, protect and enforce our intellectual property portfolio;
acquire or in-license other drug candidates and technologies;
hire and retain additional clinical, quality control, manufacturing, medical affairs and scientific personnel;
achieve milestones triggering payments by us under our current and potential future licensing and/or collaboration agreements;
build out or expand existing facilities to support our ongoing development activity; and
add operational, financial and management information systems and personnel, including personnel to support our drug development, any future commercialization efforts and any additional requirement of being a public company.
We expect that our existing cash, cash equivalents and short-term investments will enable us to fund our operations into the third quarter of 2026, which is less than 12 months following the date of this report. Accordingly, our ability to continue as a going concern will require us to obtain additional funding for our operations or significantly curtail our operations to conserve our capital resources. Moreover, it is particularly difficult to estimate with certainty our future expenses given the dynamic nature of our business, and the macro-economic environment generally.
Because of the numerous risks and uncertainties associated with our research and development programs and because the extent to which we may enter into collaborations with third parties for development of our drug candidates is unknown, we are unable to estimate the timing and amounts of increased capital outlays and operating expenses associated with completing the research and development of our drug candidates. Our future capital requirements will depend on many factors, including:
the scope, progress, results and costs of researching and developing our drug candidates and programs, and of conducting nonclinical studies and clinical trials;
the timing of, and the costs involved in, obtaining marketing approvals for drug candidates we develop if clinical trials are successful;
the cost of commercialization activities for our current drug candidates, and any future drug candidates we develop, whether alone or in collaboration, including marketing, sales and distribution costs if our current drug candidates or any future drug candidate we develop is approved for sale;
the cost of manufacturing our current and future drug candidates for clinical trials in preparation for marketing approval and commercialization;
our ability to establish and maintain strategic licenses or other arrangements and the financial terms of such agreements;
the costs involved in preparing, filing, prosecuting, maintaining, expanding, defending and enforcing patent claims, including litigation costs and the outcome of such litigation;
the timing, receipt and amount of sales of, or profit share or royalties on, our future products, if any;
the emergence of competing therapies for hepatological indications and viral diseases and other adverse market developments; and
any acquisitions or in-licensing of other programs or technologies.
Developing pharmaceutical products, including conducting nonclinical studies and clinical trials, is a time-consuming, expensive and uncertain process that takes years to complete, and we may never generate the necessary data or results required to obtain marketing approval for any drug candidates or generate revenue from the sale of any drug candidate for which we may obtain marketing approval. In addition, our drug candidates, if approved, may not achieve commercial success. Our commercial product revenues, if any, will be derived from sales of drugs that we do not expect to be commercially available for many years, if ever. Accordingly, we will need to obtain substantial additional funds to achieve our business objectives.
Adequate additional funds may not be available to us on acceptable terms, or at all. We do not currently have any committed external source of funds. To the extent that we raise additional capital through the sale of equity or convertible debt securities, ownership interest may be diluted, and the terms of these securities may include liquidation or other preferences and anti-dilution protections that could adversely affect the rights of a common stockholder. Additional debt or preferred equity financing, if available, may involve agreements that include restrictive covenants that may limit our ability to take specific actions, such as incurring debt, making capital expenditures or declaring dividends, which could adversely constrain our ability to conduct our business, and may require the issuance of warrants, which could potentially dilute ownership interest.
If we raise additional funds through collaborations, strategic alliances or licensing arrangements with third parties, we may have to relinquish valuable rights to our technology, future revenue streams, research programs, or drug candidates or grant licenses on terms that may not be favorable to us. If we are unable to raise additional funds through equity or debt financings or collaborations, strategic alliances or licensing arrangements with third parties when needed, we may be required to delay, limit, reduce and/or terminate our product development programs or any future commercialization efforts or grant rights to develop and market drug candidates that we would otherwise prefer to develop and market ourselves.
Cash Flows
The following table summarizes our sources and uses of cash for each of the periods presented (in thousands):
Year Ended
December 31,
Net cash and cash equivalents used in operating activities
Net cash and cash equivalents used in investing activities
Net cash and cash equivalents provided by financing activities
Net decrease in cash, cash equivalents, and restricted cash
Operating activities
During Fiscal 2025, operating activities used $82.5 million of cash, primarily resulting from our net loss of $24.2 million, which was largely due to ongoing research and development activities and general and administrative expenses to support those activities. Cash used as a result of changes in our operating assets and liabilities of $3.8 million consisted of a decrease of $3.1 million in operating lease liabilities, a decrease of $0.2 million in deferred revenue, a decrease in accrued liabilities of $2.0 million, offset by an increase of $1.4 million in accounts payable and an increase of $0.1 million in other assets. Additionally, there were non-cash charges of $54.5 million, primarily driven by the non-cash change in fair value of the 2023 Common Warrants.
During Fiscal 2024, operating activities used $80.7 million of cash, primarily resulting from our net loss of $131.2 million, which was largely due to ongoing research and development activities and general and administrative expenses to support those activities. Cash used as a result of changes in our operating assets and liabilities of $5.0 million, consisted of a decrease of $2.7 million in operating lease liabilities, a decrease of $1.2
million in deferred revenue, a decrease in accrued liabilities of $1.4 million, partially offset by an increase in other current assets of $0.2 million, and an increase of $0.1 million in accounts payable. Offsetting this, there were non-cash charges of $55.4 million, primarily driven by the non-cash change in fair value of the 2023 Common Warrants.
Investing activities
During Fiscal 2025, investing activities used $37.8 million of cash, consisting primarily of investment purchases of $164.9 million partially offset by investment maturities of $127.5 million.
During Fiscal 2024, investing activities used $18.3 million of cash, consisting primarily of investment purchases of $108.1 million partially offset by investment maturities of $90.0 million.
Financing activities
During Fiscal 2025, net cash provided by financing activities was $101.6 million, primarily from proceeds from issuance of common stock, common warrants and pre-funded warrants in connection with PIPE offering.
During Fiscal 2024, net cash provided by financing activities was not material.
Contractual obligations and commitments
Our principal commitments consist of obligations under license agreements, for example with Emory and KU Leuven, where we may be required to make significant milestone or royalty payments. Additionally we have additional obligations under our operating leases for office space in South San Francisco, California, Belgium, and Shanghai, China and finance lease commitments representing obligations related to vehicle leases for employees and a lease for lab equipment. All of our finance leases are for assets in Belgium. We do not have any material purchase commitments for contracts with fixed or minimum service requirements. We also enter into contracts in the normal course of business with various vendors that generally provide for contract termination following a certain notice period. The Company enters into contracts in the normal course of business that includes arrangements with clinical research organizations, vendors for preclinical research and vendors for manufacturing. These agreements generally allow for cancellation with notice. As of December 31, 2025, we had no material non-cancellable purchase commitments.
Off-balance sheet arrangements
We did not have during the periods presented, and we do not currently have, any off-balance sheet arrangements, as defined in the rules and regulations of the SEC.
Indemnification agreements
We enter into standard indemnification arrangements in the ordinary course of business. Pursuant to these arrangements, we indemnify, hold harmless and agree to reimburse the indemnified parties for losses suffered or incurred by the indemnified party, in connection with any trade secret, copyright, patent or other intellectual property infringement claim by any third party with respect to its technology. The term of these indemnification agreements is generally perpetual any time after the execution of the agreement. The maximum potential amount of future payments we could be required to make under these arrangements is not determinable. We have never incurred costs to defend lawsuits or settle claims related to these indemnification agreements. As a result, we believe the fair value of these agreements is minimal.
Critical accounting estimates
Our management’s discussion and analysis of our financial condition and results of operations is based on our consolidated financial statements, which have been prepared in accordance with U.S. generally accepted accounting principles (GAAP). The preparation of these consolidated financial statements requires us to make estimates and assumptions that affect the reported amounts and the disclosure of assets and liabilities at the date of the consolidated financial statements, as well as the reported expenses incurred during the reporting periods. Our estimates are based on relevant assumptions that we believe are reasonable under the circumstances, the results of which form the basis for making judgments about the carrying value of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions.
While our significant accounting policies are described in the notes to our consolidated financial statements included elsewhere in this Annual Report on Form 10-K, we believe that the following critical accounting policies
are most important to understanding and evaluating our reported financial results and future performance, as these policies relate to the more significant areas involving management’s judgments and estimates.
Accrued research and development expenses
We record accrued expenses for estimated costs of our research and development activities conducted by third-party service providers, which include the conduct of clinical trials and nonclinical studies. We record the estimated expenses of research and development activities based upon the estimated amount of services provided but not yet invoiced. We record accrued expenses for these costs based on factors such as estimates of the work completed and in accordance with agreements established with these third-party service providers and discussions with internal personnel and external service providers as to the progress or stage of completion of these services. Any payments made in advance of services provided are recorded as prepaid expenses and other assets, which are expensed as the contracted services are performed.
As actual costs become known, we adjust our accrued estimates. Although we do not expect our estimates to be materially different from amounts actually incurred, our understanding of the status and timing of services performed could vary from actuals and result in us reporting amounts that are too high or too low in any particular period. Our accrued expenses are dependent, in part, upon the receipt of timely and accurate reporting from clinical research organizations and other third-party service providers. For the periods presented, we have experienced no material differences between our accrued expenses and actual expenses.
Emerging growth company status
In April 2012, the Jumpstart Our Business Startups Act of 2012 (the JOBS Act), was enacted. Section 107 of the JOBS Act provides that an “emerging growth company” (an EGC) can take advantage of the extended transition period provided in Section 7(a)(2)(B) of the Securities Act for complying with new or revised accounting standards. Thus, an EGC can delay the adoption of certain accounting standards until those standards would otherwise apply to private companies. We elected to use the extended transition period for any new or revised accounting standards during the period in which we remained an EGC. Our status as an EGC ended on the last day of the fiscal year ending after the fifth anniversary of our initial public offering, i.e., December 31, 2025.
Recently issued and adopted accounting pronouncements
A description of recently issued accounting pronouncements that may potentially impact our financial position and results of operations is disclosed in Note 2 to our consolidated financial statements.
Item 7A. Quantitative and Qualitati ve Disclosures About Market Risk.
Interest rate risk
Our cash, cash equivalents and investments of $77.8 million as of December 31, 2025, consist of bank deposits, money market funds, and US Treasury available-for-sale securities. We are exposed to market risk related to changes in interest rates applicable to our investment portfolio of cash equivalents and short-term investments. Our primary exposure to market risk is interest income sensitivity, which is affected by changes in the general level of U.S. interest rates. Should U.S. interest rates decline, interest income would be reduced in future periods for short-term investments which mature and the proceeds of which are reinvested in similar instruments at lower interest rates. Additionally, the fair value of our short-term investments is subject to change as a result of potential changes in market interest rates. As of December 31, 2025, we estimate that a hypothetical 100 basis point adverse movement would not result in a material impact on our financial position or results of operations or cash flows.
Foreign currency exchange risk
We have employees and operations, including contracts with third-party vendors, in Europe through our subsidiary Aligos Belgium BVBA. We have employees and operations in China through our subsidiary Aligos Therapeutics (Shanghai) Co., Ltd., and similar, but more limited, operations in Australia. Though the functional currency in these locations is the U.S. dollar, we remeasure transactions initially recorded in local currencies in these locations, the Euro, Australian dollar and Chinese Yuan, respectively, to the U.S. dollars periodically. As such, we are exposed to foreign currency exchange risk as the underlying contracts to pay employees or vendors in these locations are generally denominated in the local currencies. A decline in the value of the U.S. dollar relative to these currencies would increase our cost of doing business in these locations. We are subject to foreign currency transaction gains or losses on our contracts denominated in foreign currencies. To date, foreign currency transaction gains and losses have not been material to our financial statements, and we have not had a formal hedging program
with respect to foreign currency. A 10% increase or decrease in current exchange rates would not have a material effect on our financial position or results of operations or cash flows.
Item 8. Financial Statement s and Supplementary Data.
Index to Financial Statements
Report of Independent Registered Public Accounting Firm (PCAOB ID 42 )
Consolidated Balance Sheets
Consolidated Statements of Operations and Comprehensive Loss
Consolidated Statements of Changes in Stockholders’ Equity (Deficit)
Consolidated Statements of Cash Flows
Notes to Consolidated Financial Statements
Report of Independent Regist ered Public Accounting Firm
To the Stockholders and Board of Directors of Aligos Therapeutics, Inc.
Opinion on the Financial Statements
We have audited the accompanying consolidated balance sheets of Aligos Therapeutics, Inc. (the Company) as of December 31, 2025 and 2024, the related consolidated statements of operations and comprehensive loss, changes in stockholders’ equity (deficit) and cash flows for each of the two years in the period ended December 31, 2025, and the related notes (collectively referred to as the “consolidated financial statements”). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company at December 31, 2025 and 2024, and the results of its operations and its cash flows for each of the two years in the period ended December 31, 2025, in conformity with U.S. generally accepted accounting principles.
The Company’s Ability to Continue as a Going Concern
The accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 1 to the consolidated financial statements, the Company has incurred recurring losses from operations, negative cash flows from operating activities, and has stated that substantial doubt exists about the Company’s ability to continue as a going concern. Management's evaluation of the events and conditions and management’s plans regarding these matters are also described in Note 1. The consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.
Basis for Opinion
These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Company’s financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company's internal control over financial reporting. Accordingly, we express no such opinion.
Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.
Critical Audit Matter
The critical audit matter communicated below is a matter arising from the current period audit of the financial statements that was communicated or required to be communicated to the audit committee and that: (1) relates to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective or complex judgments. The communication of the critical audit matter does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the account or disclosures to which it relates.
Accrued research and development expenses – clinical trials
Description of the Matter
The Company recorded accrued research and development expenses of $1.6 million as of December 31, 2025. As described in Note 2, the Company records accruals for estimated clinical trial expenses based on the services performed pursuant to contracts with contract research organizations that conduct and manage clinical trials on the Company’s behalf.
Auditing management’s accounting for clinical trial accruals was challenging as evaluating the progress of the activities under the Company’s clinical trial agreements is dependent upon information from internal clinical operations personnel and third-party service providers and involves a high volume of data.
How We Addressed the Matter in Our Audit
To test the completeness and accuracy of information used to estimate clinical trial expenses, our audit procedures included, among others, confirming with a sample of vendors the progress of activities under research and development contracts at period end, testing a sample of cash disbursements after period end to assess the completeness of accrued expenses, and making inquiries of individuals outside the finance function who oversee the clinical operations process.
/s/ Ernst & Young LLP
We have served as the Company’s auditor since 2019.
San Francisco, California
March 5, 2026
Consolidated B alance Sheets
(In thousands, except share and per share data)
December 31,
December 31,
ASSETS
Current assets:
Cash and cash equivalents
Restricted cash
Short-term investments
Other current assets
Total current assets
Operating lease right-of-use assets
Property and equipment, net
Other assets
Total assets
LIABILITIES AND
STOCKHOLDERS’ EQUITY (DEFICIT)
Current liabilities:
Accounts payable
Accrued liabilities
Operating lease liabilities, current
Finance lease liabilities, current
Deferred revenue, current
Total current liabilities
Operating lease liabilities, net of current portion
Finance lease liabilities, net of current portion
2023 Common Warrants liability
Long term liability
Total liabilities
Commitments and contingencies (Note 12)
Stockholders’ equity (deficit):
Preferred Stock, $ 0.0001 par value; 10,000,000 shares authorized as of December 31, 2025 and December 31, 2024, respectively; no shares issued and outstanding as of December 31, 2025 and December 31, 2024, respectively.
Common stock, $ 0.0001 par value; 115,800,000 shares and 20,800,000 shares authorized as of December 31, 2025 and December 31, 2024, respectively; 6,178,230 and 3,864,436 shares issued and outstanding as of December 31, 2025 and December 31, 2024, respectively.
Additional paid-in capital
Accumulated deficit
Accumulated other comprehensive income
Total stockholders’ equity (deficit)
Total liabilities and stockholders’ equity (deficit)
The accompanying notes are an integral part of these consolidated financial statements.
Consolidated Statements of Oper ations and Comprehensive Loss
(In thousands, except share and per share data)
Year Ended
December 31,
Revenue from collaborations
Revenue from customers
Operating expenses:
Research and development
General and administrative
Total operating expenses
Loss from operations
Interest and other income, net
Change in fair value of 2023 Common Warrants
Loss before income tax
Income tax provision
Net loss
Other comprehensive income (loss):
Unrealized gain on available-for-sale securities
Unrealized loss on pension plans
Other comprehensive income (loss)
Comprehensive loss
Net loss per share, basic and diluted
Weighted average shares of common stock, basic and diluted
The accompanying notes are an integral part of these consolidated financial statements.
Consolidated Statements of Changes in Stockholders’ Equity (Deficit)
(In thousands, except share and per share data)
Year Ended December 31, 2025
Common Stock
Additional
Paid-in
Accumulated
Accumulated
Other
Comprehensive
Total
Stockholders’
Shares
Amount
Capital
Deficit
Income
Equity (Deficit)
Balance as of December 31, 2023
Issuance of common stock related
to ESPP purchase
Issuance of common stock upon
exercise of pre-funded warrants
Issuance of common stock upon
exercise of common warrants
Issuance of common stock from RSU vesting
Stock-based compensation expense related to employee stock awards
Stock-based compensation expense related to employee stock purchases
Other comprehensive loss
Net loss
Balance as of December 31, 2024
Issuance of common stock related
to ESPP purchase
Issuance of common stock upon
exercise of pre-funded warrants
Issuance of common stock upon
exercise of common warrants
Issuance of common stock from RSU vesting
Issuance of common stock upon PIPE
Issuance costs
Stock-based compensation expense related to employee stock awards
Stock-based compensation expense related to employee stock purchases
Other comprehensive income
Net loss
Balance as of December 31, 2025
The accompanying notes are an integral part of these consolidated financial statements.
Consolidated State ments of Cash Flows
(In thousands)
Year Ended December 31,
Cash flows from operating activities:
Net loss
Adjustments to reconcile net loss to net cash used in operating activities:
Accretion of discount on investments
Non cash lease expense
Change in fair value of 2023 Common Warrants
Depreciation expense
Stock-based compensation including ESPP
Changes in operating assets and liabilities:
Accounts payable
Accrued liabilities
Operating lease liabilities
Deferred revenue
Other assets
Net cash and cash equivalents used in operating activities
Cash flows from investing activities:
Maturities of short-term investments
Purchase of short-term investments
Purchases of property and equipment
Net cash and cash equivalents used in investing activities
Cash flows from financing activities:
Proceeds from issuance of common stock upon exercise of pre-funded warrants
Proceeds from issuance of common stock, common warrants and pre-funded warrants in connection with PIPE offering, net of costs
Payments on finance lease
Proceeds from the ESPP purchase
Net cash and cash equivalents provided by financing activities
Net decrease in cash, cash equivalents, and restricted cash
Cash, cash equivalents, and restricted cash, beginning of period
Cash, cash equivalents, and restricted cash, end of period
The accompanying notes are an integral part of these consolidated financial statements.
Aligos Therapeutics, Inc.
Notes to consolidated financial statements
1. Organization and basis of presentation
Description of business
Aligos Therapeutics, Inc. (Aligos-US) was incorporated in the state of Delaware on February 5, 2018 (inception). On September 10, 2018, the Company formed Aligos Belgium BVBA (the Subsidiary or Aligos-Belgium). On March 30, 2020, the Company formed as a wholly owned subsidiary, Aligos Australia Pty LTD (Aligos-Australia), a proprietary limited company. On May 18, 2021, the Company formed as a wholly owned subsidiary, Aligos Therapeutics (Shanghai) Co. Ltd. (Aligos-Shanghai) and together with Aligos-US, Aligos-Belgium, and Aligos-Australia being the Company or Aligos.
Aligos is a clinical-stage biotechnology company developing novel therapeutics to address unmet medical needs in liver and viral diseases, including for chronic hepatitis B virus (HBV) infection, obesity, metabolic dysfunction associated steatohepatitis (MASH), and coronaviruses.
The Company is devoting substantially all of its efforts to the research and development of its drug candidates. The Company has not generated any product revenue to date. The Company is also subject to a number of risks similar to other companies in the biotechnology industry, including the uncertainty of success of its nonclinical studies and clinical trials, regulatory approval of drug candidates, uncertainty of market acceptance of products, competition from substitute products and larger companies, the need to obtain additional financing, compliance with government regulations, protection of proprietary technology, dependence on third-parties, product liability, and dependence on key individuals.
Basis of presentation
The accompanying consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles (U.S. GAAP) and include all adjustments necessary for the fair presentation of the Company’s financial position for the periods presented. Any reference in these notes to applicable accounting guidance is meant to refer to the authoritative U.S. GAAP included in the Accounting Standards Codification (ASC), and Accounting Standards Update (ASU) issued by the Financial Accounting Standards Board (the FASB).
Liquidity and Going Concern
As of December 31, 2025, the Company has cash, cash equivalent and short-term investments of $ 77.8 million , and as of December 31, 2025 and 2024, the Company had an accumulated deficit of approximately $ 642.2 million and $ 618.0 million , respectively. The Company has incurred losses and negative cash flows from operations since its inception. The Company expects that its cash, cash equivalents and short-term investments will be sufficient to fund current planned operations into the third quarter of 2026, which is less than one year from the date of filing this Annual Report on Form 10-K. The Company plans to raise substantial additional capital to continue as a going concern, including through a combination of public or private equity offerings, third-party funding, collaborations, strategic alliances, and licensing arrangements. In addition, the Company is evaluating future financing opportunities, and intends to secure additional funding.
However, there can be no assurance that any additional financing will be available to the Company on acceptable terms, if at all. If events or circumstances occur such that the Company does not obtain additional funding, it may be necessary to significantly reduce its scope of operations to reduce the current rate of spending, which could include reductions in staff and the need to delay, limit, reduce or terminate current or future product development, which could have a material adverse effect on the Company’s business, results of operations and financial condition. Moreover, even if financing efforts are successful and additional capital is obtained, available liquidity may still be insufficient to eliminate the aforementioned substantial doubt regarding the Company’s ability to continue as a going concern.
The accompanying financial statements have been prepared assuming the Company will continue to operate as a going concern, which contemplates the realization of assets and the settlement of liabilities in the normal course of business. The financial statements do not include any adjustments to reflect the possible future effects on the recoverability and classification of assets or the amounts of liabilities that may result from uncertainty related to the
Company’s ability to continue as a going concern.
Periodically, the Company maintains deposits in accredited financial institutions in excess of federally insured limits. The Company deposits its cash in financial institutions that it believes have high credit quality and has not experienced any losses on such accounts and does not believe it is exposed to any unusual credit risk beyond the normal credit risk associated with commercial banking relationships. The Company maintains a dual banking system to limit its credit and liquidity risk.
2. Summary of significant accounting policies
The accompanying consolidated financial statements have been prepared on a basis that contemplates the continuity of operations, realization of assets and the satisfaction of liabilities and commitments in the normal course of business.
Risks and uncertainties
The Company is subject to risks common to companies in the biotechnology industry including, but not limited to, new technological innovations, protection of proprietary technology, dependence on key personnel, compliance with government regulations and the need to obtain additional financing. As a result, the Company is unable to predict the timing or amount of increased expenses or when or if the Company will be able to achieve or maintain profitability. Drug candidates currently under development will require significant additional research and development efforts, including extensive nonclinical and clinical testing and regulatory approval.
Moreover, it is particularly difficult to estimate with certainty the Company’s future expenses given the dynamic nature of its business, and the macro-economic environment generally.
Principles of consolidation
The accompanying consolidated financial statements include Aligos-US and its wholly owned subsidiaries Aligos-Belgium, Aligos-Australia and Aligos-Shanghai. All intercompany balances and transactions have been eliminated.
Use of estimates
The preparation of financial statements in conformity with U.S. GAAP requires management to make judgments, estimates and assumptions that affect the reported amounts of assets, liabilities, revenue and expenses, and related disclosures. Management bases its estimates on historical experience and on various other assumptions that are believed to be reasonable under the circumstances. These estimates form the basis for making judgments about the carrying values of assets and liabilities when these values are not readily apparent from other sources. Accounting estimates and judgments are inherently uncertain, and the actual results could differ from these estimates.
Foreign currency
The Company’s foreign subsidiaries use the U.S. dollar as their functional currency, and they initially measure the foreign currency denominated assets and liabilities at the transaction date. Monetary assets and liabilities are then re-measured at exchange rates in effect at the end of each period, and non-monetary assets and liabilities are converted at historical rates. A re-measurement loss of $ 0.2 million was recognized during the year ended December 31, 2025 and an immaterial re-measurement loss was recognized during the year ended December 31, 2024 , and are reflected within interest and other income, net on the Consolidated Statements of Operations and Comprehensive Loss.
Segment information
The Company has one reportable segment which is focused on discovering and developing drug candidates in both liver and viral diseases. The Company’s Chairman, President and Chief Executive Officer, who is the chief operating decision maker (CODM) , assesses segment performance and decides how to allocate resources based on net loss that is also reported on the Consolidated Statements of Operations and Comprehensive Loss. See Note 15, Segment disclosure, for additional information.
Cash equivalents
The Company considers all highly liquid investments purchased with original maturities of 90 days or less at acquisition to be cash equivalents.
Restricted cash
For each of the years ended December 31, 2025 and 2024, the restricted cash balance was $ 0.1 million , and was used primarily to secure letters of credit in relation to the Company’s operating leases and deposits on rental assets (Note 5), as well as employee withholdings for the employee stock purchase plan .
Short-term investments
The Company generally invests its excess cash in money market funds and investment grade short-to-intermediate-term fixed income securities. Such investments are included in cash, cash equivalents and short-term investments on the Consolidated Balance Sheets.
The Company determines the appropriate classification of securities at the time of purchase and re-evaluates such designation as of each balance sheet date. Available-for-sale debt securities are measured and reported at fair value using quoted prices in active markets for similar securities. Unrealized gains and losses on available-for-sale securities are reported as a separate component of stockholders’ equity (deficit). Premiums or discounts from par value are amortized to investment income over the life of the underlying investment. The cost of securities sold is determined on a specific identification basis, and realized gains and losses are included in interest and other income, net within the Consolidated Statements of Operations and Comprehensive Loss.
The Company assesses available-for-sale debt securities on a quarterly basis to see whether any unrealized loss is due to credit-related factors. Factors considered in determining whether an impairment is credit-related include the extent to which the investment’s fair value is less than its cost basis, declines in published credit ratings, changes in interest rates, and any other adverse factors related to the security. If it is determined that a credit-related impairment exists, the Company will measure the credit loss based on a discounted cash flow model. Credit-related impairments on available-for-sale debt securities are recognized as an allowance for credit losses with a corresponding adjustment to other income, net in the Company’s consolidated statement of operations. The unrealized loss position that is not credit-related is recorded, net of any related tax effects, in other comprehensive income until realized. There were no credit-related losses recognized for the periods presented.
Accrued Interest Receivable
Accrued interest receivable related to the Company’s available-for-sale debt securities is presented within other current assets on the Company’s consolidated balance sheets. The Company has elected to exclude accrued interest receivable from both the fair value and the amortized cost basis of available-for-sale debt securities for the purposes of identifying and measuring any impairment. The Company writes off accrued interest receivable once it has determined that the asset is not realizable. Any write offs of accrued interest receivable are recorded by reversing interest income, recognizing credit loss expense, or a combination of both. To date, the Company has not written off any accrued interest receivables associated with its available-for-sale debt securities.
Concentrations of credit risk and significant suppliers
The Company has no significant off-balance sheet risk, such as foreign exchange contracts, option contracts, or other foreign hedging arrangements. Financial instruments that potentially expose the Company to concentrations of credit risk consist primarily of cash, restricted cash and investments. Periodically, the Company maintains deposits in accredited financial institutions in excess of federally insured limits. The Company deposits its cash in financial institutions that it believes have high credit quality and has not experienced any losses on such accounts and does not believe it is exposed to any unusual credit risk beyond the normal credit risk associated with commercial banking relationships. The Company generally invests its excess capital in money market funds, U.S. treasury bonds, U.S. treasury bills and certificates of deposit that are subject to minimal credit and market risks.
The Company is dependent on various third parties to manufacture compounds for the Company to conduct research and studies for its programs. These programs would be adversely delayed by a significant interruption in the supply of active pharmaceutical ingredients.
Accounting for Government Grants
In 2022, the Company was awarded a grant of $ 1.1 million by the National Institutes of Health (NIH) for research to target coronaviruses. The grant is for multiple years with the amount updated after each year of progress through 2025, subject to the annual reapplication and approval by the NIH. In 2023, the approved grant awarded was an additional $ 1.4 million. In 2024, the approved grant awarded was an additional $ 1.5 million. The contract ended in 2025.
In 2023, the Company was awarded a contract of $ 8.5 million by the National Institute of Allergies and Infectious Diseases (NIAID) for research to target coronaviruses. In March 2024, the Company entered into an amendment to the above contract and was awarded an additional $ 1.3 million, making the total contract value $ 9.8 million. In April 2025, the Company entered into an amendment to the above contract and was awarded an additional $ 1.5 million, for a total of $ 11.3 million. The contract completion is expected in 2026 .
U.S. GAAP does not contain authoritative accounting standards for grants or contracts provided by governmental entities to a for-profit entity. Absent authoritative accounting standards, interpretative guidance issued and commonly applied by financial statement preparers allows for the selection of accounting policies amongst acceptable alternatives. The Company determined it most appropriate to account for grants by analogy to International Accounting Standards 20 (“IAS 20”), Accounting for Government Grants and Disclosure of Government Assistance. Under this model, reimbursements the Company receives from the U.S. government for qualifying expenditures under the NIH grant will be recognized in earnings as a reduction to research and development expense when there is reasonable assurance that the Company will receive the grant. IAS 20 does not define “reasonable assurance”; however, the Company analogized this to “probable” as defined in FASB ASC 450-20-20 under U.S. GAAP, which is the definition the Company has applied. The grants and contracts will be recognized in earnings as a reduction of the related research and development (R&D) expenses.
During the year ended December 31, 2025 , $ 5.4 million was recognized as a reduction to R&D expenses. During the year ended December 31, 2024 , $ 2.8 million was recognized as a reduction to R&D expenses.
Common Warrants liability
The Company accounts for certain warrants as liabilities at fair value and adjusts the instruments to fair value at each reporting period. The Company determined that its outstanding warrants are freestanding derivative instruments. The warrants are subject to remeasurement at each balance sheet date until exercised, and any change in fair value is recognized in the Consolidated Statements of Operations and Comprehensive Loss. The fair value of the warrants issued by the Company has been estimated and is remeasured at the end of each reporting period using a Black-Scholes option pricing model.
Leases
The Company determines at the inception of the lease if an arrangement is a lease. Operating leases are included in operating lease right-of-use (ROU) assets and operating lease liabilities in the Consolidated Balance Sheets. Finance leases are included in property and equipment and finance lease liabilities in the Consolidated Balance Sheets.
ROU assets represent the right to use an underlying asset for the lease term and lease liabilities represent the obligation to make lease payments arising from the lease. Operating lease ROU assets and liabilities are recognized at the lease commencement date based on the present value of lease payments over the lease term. When the Company’s leases do not provide an implicit rate, an incremental borrowing rate is used based on the information available at the commencement dates in determining the present value of lease payments. The Company uses the implicit rate when readily determinable. The operating lease ROU assets also include any lease payments made and excludes lease incentives when paid by the Company or on the Company’s behalf. The Company’s lease terms may include the period covered by options to extend or terminate the lease when it is reasonably certain that the Company will exercise that option. Lease expense for operating leases is recognized on a straight-line basis over the lease term.
The Company has lease agreements with lease and non-lease components. The Company elected to not separate lease and non-lease components for all of its building leases. For vehicle leases, lease and non-lease components are accounted for separately. The Company also made an accounting policy election to recognize lease expense for leases with a term of 12 months or less on a straight-line basis over the lease term and not recognize ROU assets or lease liabilities for such leases.
Property and equipment
Property and equipment is stated at cost less accumulated depreciation, and is depreciated using the straight-line method over the estimated useful life of the asset, which are as follows:
Lab equipment
3 years
Computer equipment
3 years
Furniture and office equipment
3 - 8 years
Vehicles
4 years
Leasehold improvements
Shorter of the useful life or
remaining lease term
Expenditures for repairs and maintenance of assets are charged to expense as incurred. Upon retirement or sale, the cost and related accumulated depreciation of assets disposed of are removed from the accounts and any resulting gain or loss is included in loss from operations.
Impairment of long-lived assets
The Company regularly reviews the carrying amount of its property, equipment, other long-lived assets and intangible assets to determine whether indicators of impairment may exist which warrant adjustments to carrying values or estimated useful lives. If indications of impairment exist, projected future undiscounted cash flows associated with the asset are compared to the carrying amount to determine whether the asset’s value is recoverable. If the carrying value of the asset exceeds such projected undiscounted cash flows, the asset will be written down to its estimated fair value. No impairment charges were recorded during the years ended December 31, 2025 or 2024 .
Research and development expenses
Research and development costs are expensed as incurred. Research and development expenses consist of costs incurred in performing research and development activities, including salaries, stock-based compensation and benefits, facilities costs, depreciation, and third-party license fees. Non-refundable prepayments for goods or services that will be used or rendered for future research and development activities are deferred and capitalized.
In-process research and development (IPR&D) expense represents the costs to acquire technologies to be used in research and development that have not reached technological feasibility or have no alternative future uses and thus are expensed as incurred. IPR&D expense also includes upfront license fees and milestones paid to collaborators for technologies with no alternative use.
Collaborative arrangements
The Company enters into collaboration arrangements with pharmaceutical and other partners, under which the Company may grant licenses to its collaboration partners to research and develop potential drug candidates. Consideration under these contracts may include an upfront payment, development, regulatory, sales and other milestone payments. Contractual payments received for research and development activities performed are recognized on a gross basis in revenue from collaboration arrangements.
The Company may also perform research and development activities under the collaboration agreements where the Company may be granted licenses from its collaboration partners. Contractual payments to the other party in collaboration agreements and costs incurred by the Company are recognized on a gross basis in research and development expenses. Development and regulatory milestones payments to collaboration partners are recorded as
research and development costs when such payments become probable. Royalties and sales-based milestone payments are recorded when the related sales occur.
When the Company enters into collaboration arrangements, the Company assesses whether the arrangement falls within the scope of ASC 808, Collaborative Arrangements (ASC 808) based on whether the arrangement involves joint operating activities and whether both parties would be active participants and would be exposed to significant risks and rewards of the arrangement. To the extent that the arrangement falls within the scope of ASC 808, the Company assesses whether the payments between the parties fall within the scope of other accounting literature such as ASC 606, Revenue from Contracts with Customers (ASC 606).
Revenue from contracts with customers
The Company enters into revenue arrangements with certain partners. Consideration under these contracts may include an upfront payment, development, regulatory, sales and other milestone payments. Contractual payments received for research and development activities performed are recognized on a gross basis in Revenue from Customers.
The Company may also perform research and development activities under the revenue agreements where the Company may be granted licenses from its partners. Contractual payments to the other party in revenue agreements and costs incurred by the Company are recognized on a gross basis in research and development expenses. For arrangements that include royalties and sales-based milestone payments, the license is deemed to be the predominant item to which such payments relate and the Company recognizes revenue at the later of when the related sales occur or when the performance obligation to which the royalty has been allocated has been satisfied.
When the Company enters into revenue arrangements, the Company assesses whether the arrangement first falls within the scope of ASC 808 based on whether the arrangement involves joint operating activities and whether both parties would be active participants and would be exposed to significant risks and rewards of the arrangement. If the arrangement does not fall into this literature, the Company then looks to ASC 606 to see whether the partner is considered a customer.
Fair value measurements
Certain assets and liabilities of the Company are carried at fair value under U.S. GAAP. Fair value is defined as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. Valuation techniques used to measure fair value must maximize the use of observable inputs and minimize the use of unobservable inputs. Financial assets and liabilities carried at fair value are to be classified and disclosed in one of the following three levels of the fair value hierarchy, of which the first two are considered observable and the last is considered unobservable:
Level 1 —Quoted prices in active markets for identical assets or liabilities.
Level 2 —Observable inputs (other than Level 1 quoted prices), such as quoted prices in active markets for similar assets or liabilities, quoted prices in markets that are not active for identical or similar assets or liabilities, or other inputs that are observable or can be corroborated by observable market data.
Level 3 —Unobservable inputs that are supported by little or no market activity that are significant to determining the fair value of the assets or liabilities, including pricing models, discounted cash flow methodologies and similar techniques.
Stock-based compensation
The Company’s stock-based awards consist of restricted stock awards and stock options. For stock-based awards issued to employees and nonemployees, the Company measures the estimated fair value of the stock-based awards on the date of grant and recognizes compensation expense for those awards over the requisite service period, which is generally the vesting period of the respective awards. The Company records expense for awards with service-based vesting using the straight-line method. The Company accounts for forfeitures as they occur.
The Company classifies stock-based compensation expense in its Consolidated Statements of Operations and Comprehensive Loss in the same manner in which the award recipient’s cash compensation costs are classified.
The fair value of each restricted stock award is the closing price of the Company’s common stock on the date of grant. The fair value of each stock option award is estimated on the date of grant using the Black-Scholes option pricing model. The Black-Scholes option-pricing model requires the use of a number of assumptions including the fair value of the common stock, expected volatility, risk-free interest rate, expected dividends, and expected term of the option.
The Company determined the expected stock volatility using a weighted-average of the historical volatility of a group of guideline companies that issued options with substantially similar terms, and expects to continue to do so until such time as the Company has adequate historical data regarding the volatility of its own traded stock price. The expected term of the Company’s stock options has been determined utilizing the simplified method for awards that qualify as “plain-vanilla” options. The risk-free interest rate is determined by reference to the U.S. Treasury yield curve in effect at the time of grant of the award for time periods approximately equal to the expected term of the award. The Company has no t paid, and does not anticipate paying, cash dividends on its common stock; therefore, the expected dividend yield is assumed to be zero .
The fair value of the Company’s 2020 Employee Stock Purchase Plan (the ESPP) is determined on the date the offering period begins using a Black-Scholes option-pricing model and similar assumptions for stock options as described above.
Income taxes
Deferred tax assets and liabilities are determined on the basis of the differences between the consolidated financial statements and tax basis of assets and liabilities using enacted tax rates in effect for the year in which the differences are expected to reverse. Changes in deferred tax assets and liabilities are recorded in the provision for income taxes. The Company assesses the likelihood that its deferred tax assets will be recovered from future taxable income and, to the extent it believes, based upon the weight of available evidence, that it is more likely than not that all or a portion of the deferred tax assets will not be realized, a valuation allowance is established.
The Company accounts for uncertain tax positions recognized in the consolidated financial statements by prescribing a more-likely-than-not threshold for financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. The provision for income taxes includes the effects of any resulting tax reserves, or unrecognized tax benefits, that are considered appropriate as well as the related interest and penalties.
Comprehensive Loss
Comprehensive loss comprises net loss and other comprehensive income (loss). Other comprehensive income (loss) income consists of foreign currency translation adjustments, unrealized gain on marketable securities and unrealized loss on pension plans.
Net loss per share
Basic net loss per share attributable to common stockholders is calculated by dividing the net loss attributable to common stockholders by the weighted-average number of shares of common stock outstanding during the period, without consideration for potentially dilutive securities. The weighted-average number of shares of common stock outstanding includes the shares subject to the pre-funded warrants as per ASC 260, shares issuable for little or no cash consideration upon the satisfaction of certain conditions, shall be considered outstanding common shares.
Diluted net loss per share attributable to common stockholders is computed by dividing the net loss attributable to common stockholders by the weighted-average number of common stock and potentially dilutive securities outstanding for the period. For purposes of the diluted net loss per share calculation, stock options, common stock subject to repurchase related to early exercise of stock options, unvested restricted stock subject to repurchase, common stock warrants and convertible notes are considered to be potentially dilutive securities.
Accordingly, in periods in which the Company reports a net loss, diluted net loss per share is the same as basic net loss per share, since dilutive common shares are not assumed to have been issued if their effect is anti-dilutive.
Benefit plans
The Company has established a defined contribution savings plan for its employees in Aligos-US under Section 401(k) of the Internal Revenue Code, and a defined benefits plan for its employees in Aligos-Belgium.
The Company uses the standard method for the recognition of the actuarial results as described in ASC 715. This means application of a 10 % corridor and amortization over the expected average remaining working lives of
the employees. The plan contains benefits to the plan participant on the normal plan retirement date and benefits to the partner after death of the plan participant. This plan is recognized under ASC 715.
Reverse Stock Split
In June 2024, the Company’s stockholders approved a reverse stock split of its authorized, issued and outstanding voting and non-voting common stock at a range of ratios between 1-for-5 to 1-for-30 , and the Company’s board of directors subsequently approved the implementation of the reverse stock split at a ratio of 1-for-25 (the Reverse Stock Split). The Reverse Stock Split was effective as of August 19, 2024.
As of the effective time of the Reverse Stock Split, every 25 issued and outstanding shares of the Company’s common stock was automatically reclassified into one issued and outstanding share of the Company’s common stock. This reduced the number of shares outstanding from 79.9 million shares to 3.3 million shares. The Reverse Stock Split did not affect the par value of the common stock. No fractional shares of common stock were issued in connection with the Reverse Stock Split and all fractional shares were rounded down to the nearest whole share with respect to outstanding shares of common stock. Any holders of common stock who would have otherwise received a fractional share of common stock pursuant to the Reverse Stock Split, received cash in lieu of the fractional share. All prior period share and per share amounts of the Company's common stock presented have been retroactively adjusted to reflect the 1-for-25 Reverse Stock Split.
Recent accounting pronouncements
In November 2024, the FASB issued ASU 2024-03 Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses. The standard is effective for fiscal years beginning after December 15, 2026, and interim periods beginning after December 15, 2027. Early adoption is permitted. The Company is evaluating the potential impact of this standard on its consolidated financial statements.
In November 2025, the FASB issued ASU 2025-10 Government Grants (Topics 832) - Accounting for Government Grants Received by Business Entities. The standard is effective for fiscal years beginning after December 15, 2028, and interim periods within those annual reporting periods. Early adoption is permitted. The Company is evaluating the potential impact of this standard on its consolidated financial statements.
The Company adopted ASU 2023-09, Income Taxes (Topic 740) in the year ended December 31, 2025, and reflected the amendments on a prospective basis. See Note 11 for the income tax disclosures as amended by this ASU.
3. Balance sheet components
Property and equipment
The components of property and equipment were as follows as of December 31, 2025 and 2024:
December 31,
December 31,
Leasehold improvements
Lab equipment
Computer equipment
Furniture and office equipment
Vehicles and equipment
Asset under construction
Total, at cost
Accumulated depreciation
Total, net
During the years ended December 31, 2025 and 2024, depreciation expense was $ 0.9 million and $ 1.0 million , respectively. Finance leases for vehicles and lab equipment are also included in property and equipment on the Consolidated Balance Sheets (Note 5).
Accrued Liabilities
Accrued liabilities consisted of the following as of December 31:
December 31,
December 31,
Accrued R&D expenses
Accrued clinical expenses
Accrued compensation
Other accrued expenses
Total
4. Investments
As of December 31, 2025 and 2024, amortized cost, gross unrealized gains and losses, and estimated fair values of total fixed-maturity securities, classified as Level 1 and Level 2 in the fair value hierarchy, were as follows:
December 31, 2025
Gross
Gross
Amortized
Unrealized
Unrealized
Estimated
Cost
Gain
Loss
Fair Value
Available-for-sale securities:
U.S. Treasury bonds
Level 2
Money market funds
Level 1
December 31, 2024
Gross
Gross
Amortized
Unrealized
Unrealized
Estimated
Cost
Gain
Loss
Fair Value
Available-for-sale securities:
U.S. Treasury bonds
Level 2
Money market funds
Level 1
No short-term investments are in an unrealized loss position. Changes in fair value are related to changes in market interest rates. The Company expects to collect all contractual principal and interest payments and does not intend to sell the investments before recovery of their amortized cost bases. As of December 31, 2025 , all investments had a remaining maturity of less than one year .
The Company recorded interest income of $ 2.2 million and $ 1.7 million , respectively, during the years ended December 31, 2025 and 2024, as a component of interest and other income, net on the Company’s Consolidated Statement of Operations and Comprehensive Loss. Accrued interest receivable was no t material at each year ended December 31, 2025 and 2024.
5. Leases
The Company has operating and finance leases for corporate offices, research and development facilities, and certain vehicles and lab equipment. These leases have remaining lease terms of three to five years , some of which include options to extend the leases for five to eight years . T he Company has determined that it is not reasonably certain to exercise the options under any leases. The lease of research and development facilities includes costs for utilities and common area maintenance which have been included in the calculation of lease payments. Differences between lease payments as measured at lease inception and variations in monthly payments will be recognized as operating expenses in the period in which the obligation is incurred.
Maturities of lease liabilities as of December 31, 2025, were as follows:
Operating
Lease
Finance
Lease
Year ending December 31:
Thereafter
Less: imputed interest
Present value of lease liabilities
Less: current portion
Lease liabilities, net of current portion
The components of lease expense were as follows for the years ended December 31, 2025 and 2024:
Operating lease cost
Finance lease cost:
Amortization of right-of-use assets
Interest on lease liabilities
Total finance lease cost
The Company made payments of $ 3.8 million and $ 3.6 million during the years ended December 31, 2025 and 2024, respectively, net of immaterial sublease income.
As of December 31, 2025 and 2024, $ 0.7 million and $ 0.6 million of finance lease ROU assets, respectively, were presented as part of property and equipment on the Consolidated Balance Sheets with accumulated amortization of $ 0.5 million and $ 0.5 million, respectively.
Additional information related to the Company’s leases was as follows as of December 31:
December 31,
December 31,
Operating Lease:
Weighted-average remaining lease term (years)
Weighted-average discount rate
Finance Lease:
Weighted-average remaining lease term (years)
Weighted-average discount rate
6. Capital stock
Common stock
On October 20, 2020, the Company amended its certificate of incorporation to increase the total shares of common stock authorized for issuance to 12,800,000 and decrease the total shares of preferred stock authorized for issuance to 10,000,000 with a par value of $ 0.0001 per share. 12,000,000 shares of the common stock were designated as “Voting Common Stock” and 800,000 shares of the common stock were designated as “Non-Voting Common Stock”.
On June 27, 2024, the Company amended its certificate of incorporation to increase the total shares of voting common stock authorized for issuance from 12,000,000 to 20,000,000 .
On June 25, 2025, the Company's stockholders approved an amendment to the Company's Amended and Restated Certificate of Incorporation to increase the number of authorized shares of voting common stock from 20,000,000 shares to 100,000,000 shares and to increase the number of authorized shares of non-voting common stock from 800,000 shares to 15,800,000 shares.
The holders of shares of voting common stock are entitled to one vote for each share of common stock at all meetings of stockholders.
Preferred stock
As of December 31, 2025 and 2024 , there were 10,000,000 shares of preferred stock authorized and no preferred stock issued.
7. Common Warrants and Pre-Funded Warrants
2025 PIPE
In February 2025, the Company closed its private investment in public equity (PIPE) offering (the 2025 Private Placement) and entered into a securities purchase agreement with certain investors (the 2025 Securities Purchase Agreement) that resulted in gross proceeds of $ 105.0 million. In the 2025 Private Placement, the Company issued (i) 2,103,307 shares of the Company’s common stock, par value $ 0.0001 per share (the Common Stock), consisting of 1,427,000 shares of voting common stock and 676,307 shares of non-voting common stock, (ii) pre‑funded warrants (the 2025 Pre-Funded Warrants) to purchase up to 1,922,511 shares of Common Stock and (iii) accompanying common warrants (the 2025 Common Warrants) to purchase up to 2,012,909 shares of Common Stock. The purchase price per share was $ 26.0825 , or $ 26.0824 per 2025 Pre-Funded Warrant, which represents the purchase price per share less the $ 0.0001 per share exercise price of each Pre-Funded Warrant. Each 2025 Pre-Funded Warrant is immediately exercisable and does not expire. Each 2025 Common Warrant has an exercise price of $ 26.02 , is immediately exercisable and will expire in February 2032 . The Company received net proceeds of $ 101.4 million, after deducting the placement agent fees and expenses and offering costs.
The Company accounts for the 2025 Common Warrants and 2025 Pre-Funded Warrants in Stockholders Equity (Deficit) on the Consolidated Balance Sheet and determined the outstanding 2025 Common Warrants and 2025 Pre-Funded Warrants are freestanding derivative instruments. The Company classified the 2025 Common Warrants and 2025 Pre-Funded Warrants as equity because they met the equity scope exception under ASC 815, Derivatives and Hedging, based on the terms in the 2025 Securities Purchase Agreement.
2023 PIPE
In October 2023, the Company completed a PIPE offering and entered into a securities purchase agreement (the 2023 Securities Purchase Agreement) with certain institutional and accredited investors, pursuant to which the Company agreed to offer, issue and sell to these investors 1,257,168 shares of Common Stock, par value $ 0.0001 per share, pre-funded warrants to purchase an aggregate of 3,242,018 shares of Common Stock (the 2023 Pre-Funded Warrants), and warrants to purchase an aggregate of 2,249,680 shares of Common Stock (the 2023 Common Warrants). Each 2023 Pre-Funded Warrant has an exercise price of $ 0.0001 per share of common stock, was immediately exercisable and is exercisable until exercised in full. Each 2023 Common Warrant has an exercise price of $ 18.92 per share of common stock, is immediately exercisable and will expire on October 25, 2030 . The closing of the offering occurred on October 25, 2023. The Company received gross proceeds of $ 92.1 million, and after deducting the placement agent fees and expenses and offering costs, net proceeds were $ 86.2 million.
The following table summarizes information about shares issuable under the 2023 and 2025 Pre-Funded Warrants outstanding at December 31, 2025 and December 31, 2024:
Pre-funded warrant shares outstanding
December 31, 2025
December 31, 2024
Outstanding at the beginning of the year
Issued
Exercised
Outstanding at the end of the period
Exercisable at the end of the period
The following table sets forth a summary of the activities of the Company’s 2023 Common Warrant liability, which represents a recurring measurement that is classified with Level 3 of the fair value hierarchy wherein the fair value is estimated using significant unobservable inputs (in thousands):
December 31, 2025
December 31, 2024
Beginning liability
Common warrants issued
Common warrants exercised
Change in fair value
Ending liability
The fair value of the 2023 Common Warrants is determined at each reporting date utilizing the Black Scholes option pricing model. Changes in the fair value are recognized in earnings. The valuation of 2023 Common Warrants is inherently sensitive to fluctuations of the inputs used, primarily driven by the Company's stock price. The inputs used to determine the fair value at the reporting date were as follows:
December 31, 2025
December 31, 2024
Expected term (in years)
Risk-free interest rate
Dividend yield
Volatility
The following table summarizes information about shares issuable under the 2023 and 2025 Common Warrants outstanding at December 31, 2025 and 2024:
Common warrant shares outstanding
December 31, 2025
December 31, 2024
Outstanding at the beginning of the year
Issued
Exercised
Outstanding at the end of the period
Exercisable at the end of the period
8. Stock-based compensation
2018 Equity incentive plan
Following the Company's IPO in October 2020, the remaining shares from the 2018 Equity Incentive Plan (the 2018 Plan) were made available for issuance under the 2020 Incentive Award Plan (the 2020 Plan). As of December 31, 2025 , there are 55,234 options outstanding and exercisable under the 2018 Plan.
2020 Incentive award plan
The Company adopted the 2020 Plan effective October 15, 2020. The 2020 Plan provides for a variety of stock-based compensation awards, including stock options, stock appreciation rights, or SARs, restricted stock awards, restricted stock unit awards, performance bonus awards, performance stock unit awards, dividend equivalents, or other stock or cash-based awards. The Company has granted 1,771,959 shares subject to awards as of December 31, 2025 with 465,915 remaining available for future grant.
Following the effectiveness of the 2020 Plan, the Company will not make any further grants under the 2018 Plan. However, the 2018 Plan will continue to govern the terms and conditions of the outstanding awards granted under this plan. Shares of common stock subject to awards granted under the 2018 Plan that are forfeited or lapse unexercised and which following the effective date of the 2020 Plan are not issued under the 2018 Plan will be available for issuance under the 2020 Plan.
2024 Employment inducement award plan
The Company adopted the 2024 Employment Inducement Award Plan (the 2024 Plan) in September 2024 as an inducement material to entering employment in accordance with Nasdaq Listing Rule 5635(c)(4). The 2024 Plan is used exclusively for the grant of equity awards to individuals who were not previously employed by the Company. The 2024 Plan provides for issuance of non-qualified stock options only. The Company has granted 269,500 shares subject to awards as of December 31, 2025 with 348,584 remaining available for future grant.
2020 Employee stock purchase plan
The Company adopted the 2020 Employee Stock Purchase Plan (the 2020 ESPP) effective on October 15, 2020. The 2020 ESPP enables eligible employees of the Company to purchase shares of common stock at a discount to fair market value. The Company has initially reserved for issuance 14,756 shares of common stock pursuant to the 2020 ESPP. As of December 31, 2025, 133,682 grants of awards under this plan have been made.
During each of the years ended December 31, 2025 and 2024, the Company's 2020 ESPP compensation expense was $ 0.5 million . The assumptions that the Company used to determine the grant-date fair value of shares granted to participants were as follows, disclosed on a grant date basis:
Expected term (in years)
0.5 - 2.0 years
0.5 - 2.0 years
Risk-free interest rate
Dividend yield
Volatility
Weighted-average estimated fair value of purchase rights
Stock options
The exercise price for incentive stock options is at least 100 % of the fair market value on the date of grant for stockholders owning less than 10% of the voting power of all classes of stock, or at least 110 % of the fair market value for stockholders owning more than 10% of the voting power of all classes of stock. Options generally expire in 10 years and vest over periods determined by the Board, generally 48 months . Certain stock options referred to as “early exercise stock options” permit the holders to exercise the option in whole or in part prior to the full vesting of the option in exchange for unvested shares of Restricted Stock with respect to any unvested portion of the option so exercised.
During the years ended December 31, 2025 and December 31, 2024, the Company’s stock option compensation expense was approximately $ 4.4 million and $ 7.9 million , respectively, and there was no recognized
tax benefit in either year. As of December 31, 2025, unrecognized stock-based compensation expense related to stock options was $ 11.4 million , to be recognized over a weighted-average period of 3.02 years.
The assumptions that the Company used to determine the grant-date fair value of stock options granted to Participants were as follows, pre sented on a weighted-average basis:
Expected term (in years)
Risk-free interest rate
Dividend yield
Volatility
Stock option activity during the year ended December 31, 2025 and 2024 was as follows:
Shares
subject
to options
Weighted-
average
exercise
price
Weighted-
average
remaining
contractual
term (years)
Aggregate
Intrinsic
Value
(in thousands)
Outstanding as of December 31, 2024
Granted
Exercised
Forfeited or Expired
Outstanding as of December 31, 2025
Options vested and expected to vest as of December 31, 2025
Options vested and exercisable as of December 31, 2025
The weighted-average grant date fair value of stock options granted was $ 8.83 per share during the year ended December 31, 2025. The weighted-average grant date fair value of stock options granted was $ 12.88 per share during the year ended December 31, 2024. The total intrinsic value of stock options exercised during the years ended December 31, 2025 and 2024 were not material.
During the years ended December 31, 2025 and 2024 the Company did not issue shares for unvested stock options. As of December 31, 2025 and 2024 , there were no shares of Common Stock held by employees subject to repurchase.
Restricted stock awards
The Company may grant restricted stock purchase awards to the Participants to purchase restricted stock under the Company’s Plan, which are subject to vesting conditions. The purchase prices of the restricted stock are determined by the Board. The Company has a right to repurchase the shares if the Participant’s service period is not fulfilled or upon termination of service at the original per share issuance price. The right of repurchase lapses over a service period which is typically four years with 25 % vesting on the first anniversary of the vesting commencement date and 1/48 each month thereafter.
Before the adoption of the Company’s Plan, the Company granted 20,118 restricted stock awards to employees and founders. These restricted stock awards have similar characteristics to the restricted stock awards granted under the Company’s Plan, other than the right of repurchase, which typically lapses over three years with 33 % vesting on the first anniversary of the vesting commencement date and 1/36 each month thereafter.
During each of the years ended December 31, 2025 and 2024, the Company recorded a total stock-based compensation expense of $ 0.1 million , related to the restricted stock awards. The number of restricted stock awards vested includes shares of common stock that the Company withheld on behalf of employees or sold to cover to
satisfy the minimum statutory tax withholding requirements. As of December 31, 2025, there was $ 0.7 million unrecognized stock-based compensation costs related to outstanding unvested restricted stock awards that are expected to vest over 3.37 years.
The following table summarizes the Company’s restricted common stock activity for years ended December 31, 2025 and 2024:
Number
of Awards
Weighted-
Average
Grant Date
Fair Value
Aggregate
Fair Value
(in thousands)
Issued and unvested as of December 31, 2024
Granted
Vested and released
Issued and unvested as of December 31, 2025
Stock-based compensation expense was allocated as follows for the years ended December 31, 2025 and December 31, 2024:
Year Ended
December 31,
Research and development
General and administrative
Total
9. In-licensing agreements
Agreement with Emory University (Emory)
In June 2018, the Company entered into a license agreement with Emory (the Emory License Agreement), pursuant to which Emory granted the Company a worldwide, sublicensable license under certain of its intellectual property rights to make, have made, develop, use, offer to sell, sell, import and export products containing certain compounds relating to Emory’s hepatitis B virus capsid assembly modulator technology, for all therapeutic and prophylactic uses. Such license is initially exclusive with respect to specified licensed patents owned by Emory and non-exclusive with respect to certain of Emory’s specified know-how. In June 2022, the license to such patents became non-exclusive with respect to all fields except for the treatment and prevention of HBV; however, the Company may select up to six compounds which will maintain exclusivity with respect to all therapeutic and prophylactic uses. With respect to all other compounds that are enabled by the licensed patents, those which are jointly invented by the Company and Emory or inventors in the Schinazi laboratory, or which are disclosed in a specified licensed patent, are licensed to the Company including as to Emory; whereas all other such compounds are licensed to the Company non-. Under the terms of the Emory License Agreement, the Company is obligated to use commercially reasonable efforts to bring licensed products to market in accordance with a mutually agreed upon development plan. Unless earlier by either party in accordance with the provisions thereof, the Emory License Agreement shall continue until the expiration of the last–to-expire of the patents licensed to the Company thereunder.
In June 2020, the Company amended the license agreement with Emory. Pursuant to the amended license agreement, Emory granted the Company additional patent rights to certain compounds targeting the treatment or prevention of HBV. As consideration for the additional rights, the Company made a one-time, non-refundable payment to Emory in the amount of $ 0.2 million, with an additional obligation to pay up to a maximum of $ 35,000 . On the same date, the Company entered into a collaboration agreement with Emory, with the initial research plan pertaining to the synthesis and evaluation of the compounds licensed through the additional patent rights granted in the amended license agreement. The research plan was set to terminate one year from the effective date of June 2020
but the Company exercised its option to extend it for a second year . In June 2022, the research plan terminated.
The Company has agreed to pay Emory up to an aggregate of $ 125.0 million upon the achievement of specified development, regulatory, and commercial milestones, and all ongoing patent costs. During the year ended December 31, 2025 and 2024, the Company paid $ 9.0 million related to milestone payments due to the first subject dosed in a Phase 2 clinical trial. The Company also agreed to pay Emory tiered single-digit royalties on worldwide annual net sales of licensed products, on a quarterly basis and calculated on a product-by-product basis. With respect to licensed products containing any of a specified subset of the licensed compounds, such royalties range from a mid-single digit to a high-single digit percentage rate. With respect to licensed products which do not contain such compounds, the royalties range from a low-single digit to a mid-single digit rate.
During the twelve months ended December 31, 2025 and 2024 , the Company made no payments associated with royalties and recognized no expense or accruals.
Agreement with Katholieke Universiteit Leuven (KU Leuven)
On June 25, 2020, the Company entered into a Research, Licensing and Commercialization Agreement (KU Leuven Agreement) with KU Leuven, under which the Company is collaborating with KU Leuven’s Rega Institute for Medical Research, as well as its CD3, to research and develop potential protease inhibitors for the treatment, diagnosis or prevention of coronaviruses, including of SARS-CoV-2. Unless terminated earlier by either party in accordance with provisions in the agreement, the collaboration period will terminate at the earlier of completion of all collaboration activities or 2.5 years. In connection with the KU Leuven Agreement, KU Leuven and the Company granted each other exclusive cross-licenses to use certain know-how and existing patents of the other party as well as certain joint know-how and joint patents to carry out research and development collaboration activities during the collaboration period. As of December 2022, the original collaboration period has expired. An amendment to the agreement was agreed in July 2023 to include a new plan. KU Leuven granted to the Company an (including as to KU Leuven), worldwide license under certain of KU Leuven’s know-how, and certain joint patents and joint know-how, to manufacture and commercialize the licensed products for the treatment, diagnosis or detection of viral infections in humans. KU Leuven reserved the right to use all KU Leuven knowhow, joint patents and joint know-how for academic and non-commercial research and teaching purposes. As consideration for this license, the Company is obligated to make payments to KU Leuven, in aggregate, totaling up to but no more than $ 30.0 million upon the of certain commercial sales milestones. For each licensed product developed through KU Leuven and the Company’s effort, the Company is obligated to make payments to KU Leuven, in aggregate, totaling up to $ 32.0 million upon the of certain development and regulatory milestones. The Company is also required to pay KU Leuven a low-to-mid-single digit royalty percentage, subject to certain adjustments, on net sales of applicable products, if any. The Company is also required to pay a share of upfront transaction consideration received to KU Leuven should the program be partnered with an external party. Unless earlier by either party, the agreement shall continue until the expiration of the last to expire royalty term, which is the later of the expiration or of the last valid patent claim covering the manufacture, use, sale or importation of the licensed product in a particular country or 10 years after the first commercial sale of a licensed product.
During the years ended December 31, 2025 and 2024 , we did not recognize any milestone payments.
10. Revenue from contracts with customers
Agreement with Amoytop
In May 2023, the Company and Amoytop Biotech Co., Ltd (Amoytop) entered into a Research Collaboration and Development Agreement (the Amoytop Agreement) with a focus on nucleic acid technology for HBV treatment, with the Company granting to Amoytop an exclusive, time-limited option to enter into an exclusive, territory-limited license to develop and commercialize such compounds. Under the terms of the agreement, the Company received an upfront payment of $ 7.0 million, less withholding taxes of $ 1.1 million from Amoytop. With respect to the agreement, the Company is eligible for up to $ 109.0 million in development and commercialization milestones as well as tiered royalties on net sales. These potential payments consist of (i) potential development milestones (such as for the commencement of a Good Laboratory Practice toxicology study for a collaboration compound, approval of IND by regulatory authority, initiation of Phase 2 and 3 clinical trials, and regulatory approval of a licensed product), and (ii) sales-based milestones.
In May 2024, the Company and Amoytop entered into an extension to the Amoytop Agreement, covering work performed through January 2025. Under the terms of the agreement, the Company received an upfront payment of $ 1.5 million, which was recognized from the second quarter of 2024 through the first quarter of 2025.
In May 2025, the Company and Amoytop entered into an additional extension to the Amoytop Agreement, covering work performed through approximately November 2025. Under the terms of the agreement, the Company received an upfront payment of $ 1.0 million, which was recognized from the second quarter of 2025 through the fourth quarter of 2025.
In September 2025, Amoytop exercised its option to obtain an exclusive, territory-limited license to one compound developed under the Amoytop Agreement, with the right to choose such compound among four identified candidates following the completion of the work outlined in the May 2025 extension. IND-enabling studies began on its chosen compound in January 2026, which earned the Company a milestone payment of $ 3.0 million.
The Company determined that the Amoytop agreement falls within the scope of ASC 606. The agreement did not fall under the ASC 808 guidance due to Amoytop and the Company not being joint active participants, and both parties not having significant risks and rewards. Management of the Company determined that there were three performance obligations for the agreement given the deliverables are distinct. The Company evaluated the standalone selling price for each obligation based on available data for similar arrangements. The Company evaluated the performance obligations and determined the provision of R&D services for the collaboration compound performance obligation will be satisfied over time, the research license including data and know-how has been satisfied, and the provision of materials will be satisfied upon delivery. Given the nature of the arrangement, the Company believes that the satisfaction of its performance obligations is best measured by the progress of its efforts as it relates to the performance of the R&D services. As such, the Company has used an input method based on costs incurred to recognize revenue associated with the upfront payments, and the Company recognizes revenue over time based on the costs incurred. The effect of any updates to the estimated overall costs are recorded as a change in estimate. In addition, variable consideration (e.g., milestone payments) were evaluated based on the Company’s analysis that the probability of any of the milestone payments is remote, and therefore determined to be constrained and excluded from the transaction price.
During the years ended December 31, 2025 and 2024, the Company recognized $ 2.2 million and $ 3.6 million , respectively, in revenue from customers related to upfront payments. During the years ended December 31, 2025 and 2024 , the Company recognized no revenue from customers related to milestone payments. The unrecognized portion of the upfront payments received during the twelve months ended December 31, 2025 and 2024 is recorded on the Consolidated Balance Sheets as “Deferred revenue, current”.
Changes in deferred revenue balances arose as a result of the Company recognizing the following revenue from customers during the periods below (in thousands):
As of December 31,
Deferred revenue as of January 1
Consideration received in the period
Revenue recognized in the period
Deferred revenue as of December 31
Agreement with ADCT
The Company determined that the ADC Therapeutics (ADCT) agreement falls within the scope of ASC 606. The agreement did not fall under the ASC 808 guidance due to ADCT and the Company not being joint active participants, nor both parties having significant risks and rewards. Management of the Company determined that there was one performance obligation for the agreement given the deliverables are not distinct. The Company evaluated the performance obligation and determined the performance obligations are satisfied over time. Given the nature of the arrangement, the Company believes that the satisfaction of its performance obligations is best measured by the progress of its efforts. As such, the Company has used an input method based on costs incurred to recognize revenue associated with the upfront payments, and the Company recognizes revenue over time based on the costs incurred. The effect of any updates to the estimated overall costs are recorded as a change in estimate. In addition, variable consideration (e.g., milestone payments) were evaluated based on the Company’s analysis that the
possibility of achieving any of the milestone payments is remote, and therefore determined to be constrained and excluded from the transaction price. Similarly, the Company accounts for the future royalties under the sales-based royalty exception in ASC 606-10-55-65 through 55-65B therefore they are not considered in the transaction price and expected to be recognized when future sales occur since that is expected to occur after the performance obligation has been fully satisfied.
11. Income taxes
The components of the Company’s loss before income taxes were as follows for the years ended December 31, 2025 and 2024 (in thousands):
United States
Foreign
Total loss before income taxes
The components of the Company's income tax provision were as follows for the years ended December 31, 2025 and 2024:
Current:
Federal
State
Foreign
Total current provision for income taxes
Deferred:
Federal
State
Foreign
Total deferred provision for income taxes
A reconciliation of the expected income tax computed at the federal statutory income tax rate to the Company’s effective income tax expense and rate is as follows for the year ended December 31, 2025:
Income tax computed at federal statutory tax rate
State and local taxes, net of federal income tax effect
Research tax credits
Change in valuation allowance
Nondeductible items:
Stock based compensation
Warrant marked to market
Other
Foreign tax effects:
Australia:
Other
Change in Valuation Allowance
Foreign Withholding Tax and Other
Income tax expense and effective income tax rate
As previously disclosed for the year ended December 31, 2024, a reconciliation of the expected income tax computed at the federal statutory income tax rate to the Company’s effective income tax rate as follows:
Income tax computed at federal statutory tax rate
State taxes, net of federal income tax effect
Research tax credits
Change in valuation allowance
Nondeductible items:
Stock based compensation
Warrant marked to market
Other
Foreign tax
Effective income tax rate
Income taxes paid (net of refunds) for the year ended December 31, 2025 is disaggregated as follows (in thousands):
Federal income taxes paid (net of refunds)
State income taxes paid (net of refunds)
Foreign income taxes paid (net of refunds):
China
Belgium
Total income taxes paid (net of refunds)
The components of the deferred tax assets and liabilities were as follows at December 31:
Deferred tax assets:
Net operating loss carryforward
Operating lease liabilities
Tax credits
Other accruals and reserves
Stock-based compensation
Capitalized R&D costs
Other
Valuation allowance
Net deferred tax assets
Deferred tax liabilities:
Right of use assets
Property and equipment
Total deferred tax liabilities
Total deferred income taxes
Management believes that, based on a number of factors, including the Company’s historical operating performance and accumulated deficit, it is more likely than not that the deferred tax assets will not be utilized, such that a full valuation allowance has been recorded against the Company’s deferred tax assets. In assessing the reliability of deferred tax assets, management considers whether it is more likely than not that some portion or all of the deferred tax assets will not be realized on a jurisdiction-by-jurisdiction basis. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which those temporary differences become deductible. The valuation allowance increased by $ 24.8 million during the year ended December 31, 2025, and decreased by $ 22.3 million during the year ended December 31, 2024.
As of December 31, 2025, the Company had $ 92.5 million of federal and $ 105.7 million of state net operating loss (NOL) carryforwards available to offset future taxable income. The Company’s federal NOL carryforwards can be carried forward indefinitely while state NOL carryforwards, if not utilized, will begin expiring in 2043 . As of December 31, 2025, the Company had research and development credit carryforwards of $ 3.5 million and $ 2.2 million available to reduce future taxable income, if any, for federal and state income tax purposes, respectively. If not utilized, the federal credit carryforwards will begin expiring in 2043 . The California credit carryforwards have no expiration date. The Company had $ 3.2 million of Australian NOL carryforwards and $ 0.7 million of Australian research and development tax credit carryforwards.
On July 4, 2025, the OBBBA was enacted in the United States. The OBBBA includes several significant tax provisions, such as the permanent extension of certain expiring provisions of the Tax Cuts and Jobs Act, modifications to the international tax framework and the restoration of certain business provisions. The legislation has multiple effective dates, with certain provisions effective in 2025 and others implemented through 2027. The Company will no longer be required to capitalize its domestic research and experimental costs under Section 174 of the Internal Revenue Code beginning with the tax year ending December 31, 2025. The Company evaluated the impact of the OBBBA and determined that it did not have a material impact on the Company’s consolidated financial statements for the year ended December 31, 2025.
Under Sections 382 and 383 of the Code, and corresponding provisions of state law, if a corporation undergoes an “ownership change” (generally defined as a greater than 50 percentage point change (by value) in its equity ownership over a rolling three-year period), the Company’s ability to use its pre-change NOL carryforwards and other pre-change tax attributes to offset its post-change income may be limited. The Company performed a Code Section 382 analysis in 2025, which resulted in no further ownership changes.
We may experience additional ownership changes as a result of subsequent shifts in our stock ownership, some of which may be outside of our control. In the future, if we earn net taxable income, our ability to use our
pre-change net operating loss carryforwards or other tax attributes to offset U.S. federal taxable income may be subject to limitations, which could potentially result in increased future tax liability to us and could adversely affect our business, results of operations, and cash flows. In addition, under current tax law, federal NOL carryforwards generated in periods after December 31, 2017, may be carried forward indefinitely but, may only be used to offset 80 % of our taxable income.
ASC 740-10 prescribes a comprehensive model for the recognition, measurement, presentation and disclosure in financial statements of any uncertain tax positions that have been taken or expected to be taken on a tax return. It is the Company’s policy to include penalties and interest expense related to income taxes as a component of other expense and interest expense, respectively, as necessary. During the years ended December 31, 2025 and 2024 , the Company had no t recognized any tax-related penalties or interest. No liability related to uncertain tax positions is recorded on the financial statements related to uncertain tax positions.
Balance, beginning of the period
(Decrease) increase related to prior year positions
Increase related to current year positions
Balance, end of the period
The reversal of the uncertain tax benefits would not impact the Company's effective tax rate as the Company continues to maintain a full valuation allowance against its deferred tax assets.
The Company files income tax returns in the United States, including California and Texas, Australia, Belgium, and China. The Company is not currently under examination by income tax authorities in federal, state or other jurisdictions. All income tax returns will remain open for examination by the federal, state and foreign authorities for three or four years, from the date of utilization of any NOLs or credits.
12. Commitments and contingencies
From time to time, the Company may have certain contingent liabilities, including legal matters that arise in the ordinary course of its business activities. The Company accrues a liability for such matters when it is probable that future expenditures will be made and such expenditures can be reasonably estimated. Contingent liabilities requiring accrual were appropriately accrued as of December 31, 2025 and December 31, 2024. The Company enters into contracts in the normal course of business that includes arrangements with clinical research organizations, vendors for preclinical research and vendors for manufacturing. These agreements generally allow for cancellation with notice. As of December 31, 2025, the Company had no material non-cancelable purchase commitments.
13. Benefit plans
Defined contribution plans
The Company established a defined contribution savings plan under Section 401(k) of the Internal Revenue Code. This plan covers substantially all employees who meet minimum age and service requirements and allows participants to defer a portion of their annual compensation on a pre-tax basis. The Company made matching contributions of $ 0.7 million each to the plan during the years ended December 31, 2025 and 2024, respectively.
Defined benefit plans—regular pension plan
ASC Topic 715, Compensation—Retirement Benefits , requires an employer to: (a) recognize in its statement of financial position an asset for a plan’s overfunded status or a liability for a plan’s under-funded status; (b) measure a plan’s assets and its obligations that determine its funded status as of the end of the employer’s fiscal
year; and (c) recognize changes in the funded status of a defined benefit post retirement plan in the year in which the changes occur. Accordingly, the Company is required to report changes in its funded status on its Consolidated Statement of Changes in Stockholders’ Equity (Deficit) and Consolidated Statement of Operations and Comprehensive Loss.
Aligos-Belgium offers its employees a regular pension plan in the form of a defined contribution plan (the Regular Pension Plan), which contains a 2.50 % legally required minimum rate of return for the participants. The Regular Pension Plan does not meet all the requirements that are needed for recognition of the plans as a defined contribution plan. The Company therefore recognizes the Regular Pension Plan as a defined benefit plan.
The Company measures the fair value of the Regular Plan assets by using Level 3 inputs, unobservable inputs that are supported by little or no market activity that are significant to determining the fair value of assets, including pricing models, discounted cash flow methodologies and similar techniques.
As of December 31, 2025, the projected benefit obligation was $ 1.7 million , the plan assets were $ 1.6 million and the net pension liability was $ 0.1 million . As of December 31, 2024, the projected benefit obligation was $ 1.3 million , the plan assets were $ 1.3 million , and the net pension liability was $ 0.1 million . The Company has recorded the unfunded amount as a liability in its Consolidated Balance Sheets at December 31, 2025 and 2024, under the accrued liabilities caption.
Defined benefit plans—Top Hat Plan
In Aligos-Belgium, the Company established a pension bonus complementary plan (the Top Hat Plan), where the bonus payments to each participant are added to the Top Hat Plan. The annual contributions to this plan are based on performance and determined on a discretionary basis by the Company. The Top Hat Plan contains a legal yield guarantee of 2.5 %. The Top Hat Plan became effective as of January 1, 2019.
In 2019, the Company accounted for the Top Hat Plan in accordance with ASC 715, Compensation—Retirement Benefits , once it became effective. The Top Hat Plan does not meet all the requirements that are needed for recognition as a defined contribution plan. The Company therefore recognizes the Top Hat Plan as a defined benefit plan.
As of December 31, 2025, the projected benefit obligation was $ 2.7 million , the plan assets were $ 2.5 million and the net pension liability was $ 0.3 million . As of December 31, 2024, the projected benefit obligation was $ 2.1 million , the plan assets were $ 1.9 million , and the net pension liability was $ 0.2 million . The Company has recorded the unfunded amount as a liability in its Consolidated Balance Sheets at December 31, 2025 and 2024 , under the accrued liabilities caption.
14. Net loss per share
The following table summarizes the computation of basic and diluted net loss per share of the Company:
Year Ended
December 31,
Net loss, as reported
Less: increase in available income
Diluted net loss
Weighted average shares outstanding, basic
Add: Weighted average shares issuable
Weighted average shares outstanding, diluted
Net loss per share - basic
Net loss per share - diluted
The Company’s potentially dilutive securities, which include options to purchase common stock, unvested restricted stock and warrants to purchase common stock, have been excluded from the computation of diluted net loss per share as the effect would be to reduce the net loss per share. Therefore, the weighted-average number of shares of Common Stock outstanding used to calculate both basic and diluted net loss per share is the same. The
Company excluded the following potential shares of Common Stock, presented based on amounts outstanding at each period end, from the computation of diluted net loss per share for the periods indicated because including them would have had an anti-dilutive effect:
Year Ended
December 31,
Options to purchase common stock
Unvested restricted stock
Warrants to purchase common stock
15. Segment information
The CODM assesses performance for the Company’s single reportable segment and decides how to allocate resources based on the Company’s total operating expenses as reported on the Consolidated Statements of Operations and Comprehensive Loss. The CODM’s review of total operating expenses at the consolidated level is used to monitor the Company’s spending as well as budget versus actual results. As part of the CODM’s review of the segment’s performance, the CODM reviews the Company’s operating expense information. This includes research and development costs as well as general and administrative expenses. Based upon the operating expense information, the CODM can reconcile to net loss as reported on the Consolidated Statements of Operations and Comprehensive Loss, shown in the table below. The significant expense categories are consistent with those presented on the face of the consolidated financial statements, except for the breakout of the early-stage research and development from the late-stage research and development. The CODM does not receive or use any other segmented or disaggregated financial or any significant expense information for decision making purposes.
The following table provides segment revenues, significant segment expenses and reported segment net income for the years ended December 31, 2025 and 2024:
Year ended December 31,
Revenue from collaborations
Revenue from customers
Less:
Early-stage research and development (1)
Late-stage research and development (2)
General & Administrative
Total operating expenses
Interest and other income, net
Change in fair value of 2023 Common Warrants
Loss before income tax
Income tax provision
Segment and consolidated net loss
(1) Early-stage research and development includes costs incurred from Discovery programs.
(2) Late-stage research and development includes costs incurred from Phase 1 clinical trial programs.
The Company’s reportable segment primarily generates revenue through its license and collaboration agreements (see Notes 9 and 10). The measure of segment assets is reported on the Consolidated Balance Sheets as total assets. The Company has $ 1.7 million and $ 0.2 million of fixed assets in Aligos-US and Aligos-Belgium, respectively, as of December 31, 2025, and $ 2.1 million and $ 0.2 million of fixed assets in Aligos‑US and Aligos-Belgium, respectively as of December 31, 2024 .
